Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and their wariness is understandable. The reputation of ads in video games is often tarnished by issues such as redirects to unrelated websites or apps, misleading content, and the absence of an easy way to close the ad.
These annoyances have become almost synonymous with the term "gaming ads." A recent study conducted by eMarketer highlighted the severity of the problem: 52 percent of respondents said they would stop playing a title if they encountered multiple intrusive advertising elements. Losing more than half of an audience at the very moment you are trying to engage them is hardly a winning formula. However, advertising does not have to be synonymous with irritation.
The same research revealed a more optimistic finding—one in five gamers indicated they would actually play a game more often if the in‑game advertisements were of a high quality and seamlessly integrated. This insight arrives at a crucial moment.
Xbox is currently piloting an ad‑supported game‑streaming service, and the overall cost of gaming continues to climb. In this environment, well‑crafted ads could find a natural and welcome home inside the gaming ecosystem. The argument for a hybrid "ads‑for‑games" model is stronger than many realize, and it has already been demonstrated in the world of linear media. Services such as Netflix, Disney+, and other streaming platforms have proven that offering both a premium ad‑free tier and a lower‑cost ad‑supported tier can generate significant revenue while expanding the audience.
Should Xbox’s experiment succeed, the company would not only preserve its subscription base but also unlock an entirely new revenue stream—something the brand could certainly use at this stage. Why does this matter for console gaming? The industry is increasingly positioning itself as a premium offering.
Prices for new consoles, full‑price games, accessories, and downloadable content (DLC) have all risen, creating a financial barrier for the average consumer. When Xbox announced its plans, it emphasized that, if executed correctly, advertising could lower the price of entry and make gaming more accessible. We have already witnessed this effect in the mobile‑gaming sector, where ad‑supported tiers allow players to enjoy a game without paying an upfront fee.
The model works because the cost of the ad is spread across many users, keeping the price point low for each individual. Importantly, participation would be optional. Players who prefer an uninterrupted experience could continue to pay for a subscription that removes ads, while those who are price‑sensitive could opt into the ad‑supported version.
This two‑tier approach aims to keep Xbox’s loyal community intact while simultaneously inviting newcomers who might otherwise be deterred by cost. Although there is no formal survey data on this specific rollout yet, it is reasonable to assume that a large majority of gamers would tolerate a brief 30‑second commercial if it meant gaining an hour of gameplay on a favorite or newly released title.
Xbox’s internal data likely supports this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertising consistently outperforms television, social media, and other online formats when it comes to ad recall and attribution. In other words, gamers are more likely to remember an ad they see while playing and correctly associate it with the brand that placed it. This is where Xbox’s "around‑the‑game" strategy becomes intriguing.
Rather than embedding ads directly within the gameplay, Xbox plans to display them before the game starts. Our data indicate that these pre‑game placements achieve higher recall and attribution scores compared with ads that appear inside the game world. The distinction matters because, while we can often recall an ad seen on TV or scrolling through a social feed, we do not always link it to the sponsoring brand.
Gaming appears to create a stronger mental connection between the ad and its source, which likely explains why companies such as EA and Xbox are exploring ad‑based monetisation more aggressively. It is also essential to note that Xbox’s ads are not intended to interrupt the core gameplay experience.
By positioning ads before the session begins, the company hopes to preserve immersion. This approach benefits both players—who enjoy an uninterrupted session—and advertisers, who want their messages to be part of a positive experience rather than a disruption. Relevance will be key. No one wants to see an advertisement for cat food when they don’t own a cat, or for a game they have already completed.
By delivering contextual, audience‑matched ads, Xbox can keep players from abandoning the session while giving brands a high‑impact platform to reach new consumers. Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how gamers will react to the presence of ads at all; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The move to explore ad‑supported streaming reflects the boldness of Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with new business models.
Whether this gamble pays off remains to be seen. Historically, many gaming ad campaigns have followed a "watch an ad, earn an extra life" formula. Xbox’s proposal differs: it asks players to watch an ad to access a game they already own. Our existing data set does not provide a direct answer on how this will be received.
Related research on ad‑format perception shows that when respondents are asked to describe ads they remember positively, terms like "non‑intrusive" and "immersive" frequently emerge as favorites. If Xbox—and potentially other platforms—aim to make gaming ads successful, these two attributes will be critical performance indicators. My forecast is that Xbox will neither be the first nor the last platform to test such a strategy. Advertising has been part of gaming for years, but rarely with the player’s experience as the primary focus.
Should Xbox manage to strike the right balance, it could pave the way for other companies to adopt similar models, ultimately making video games more affordable and reachable for the everyday gamer.