Virginie Chesnais serves as the chief marketing officer at Happydemics, a platform that specializes in ad‑tech analytics. For many years, gamers have viewed in‑game advertising with suspicion, and that wariness is not unfounded. The reputation of ads in video games is mixed at best; players often encounter redirects to unrelated sites or apps, misleading creative, and close buttons that are difficult to locate, all of which generate frustration.
A recent study conducted by eMarketer highlighted that 52 % of gamers would abandon a session if they ran into multiple intrusive ad elements. Losing half of an audience at the very moment you are trying to engage them is hardly an effective tactic. However, advertisements do not have to be synonymous with annoyance.
The same research revealed that one in five gamers would actually increase the frequency with which they play a title if the in‑game ads were of a high standard and felt relevant. This insight arrives at a time when Xbox is piloting an ad‑supported game‑streaming service, and the overall cost of gaming continues to climb.
High‑quality advertising could therefore find a natural home within the gaming ecosystem. The argument for incorporating a modest advertising layer into games is more compelling than many assume, and it has already been demonstrated in the realm of linear media.
Services such as Netflix, Disney+, and other streaming platforms have shown that a hybrid model—offering both ad‑free subscriptions and lower‑cost, ad‑supported tiers—can generate substantial revenue while expanding the audience base. Should Xbox’s experiment prove successful, it would not only preserve its paying subscriber base but also unlock a fresh, previously untapped stream of income at a moment when the company’s finances could benefit from diversification. The relevance of this approach becomes clearer when we consider that console gaming is increasingly positioned as a premium experience. Prices for games, consoles, accessories, and downloadable content have risen steadily, making it more difficult for the average consumer to justify the expense.
This price inflation creates a barrier that keeps many potential players on the sidelines. Xbox itself has stated that, when executed correctly, advertising can lower the cost of accessing games. Mobile gaming already offers a precedent: ad‑supported tiers allow players to enjoy titles without paying large upfront fees, thereby broadening the market. Crucially, the advertising model would be optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads. By offering a two‑tier system, Xbox aims to keep its loyal fan base satisfied while simultaneously opening the door for newcomers who might be deterred by high entry costs. Although there is no specific survey data on this particular announcement yet, it is reasonable to assume that a majority of gamers would tolerate a 30‑second commercial if it granted them an hour of gameplay in a favorite or new title. Xbox likely has internal data supporting this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America indicates that in‑game advertisements consistently outperform television, social media, and other online formats in terms of recall and attribution. In other words, players are more likely to remember an ad they see while gaming and correctly associate it with the brand that displayed it. This is where Xbox’s “around‑the‑game” strategy—ads shown before the game launches rather than embedded within the gameplay—becomes particularly intriguing.
Our data demonstrate that pre‑game placements have a distinct advantage in ad recall and attribution when compared with ads that appear directly inside the game world. The distinction matters because, while we might recall an advertisement seen on TV or while scrolling through a feed, that memory does not always translate into brand association. Gaming appears to be in a league of its own for this metric, which likely explains why companies like Xbox and EA are exploring ad‑based models more aggressively.
It is essential to note that Xbox’s ads would be pre‑game rather than in‑game. Traditional in‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability. A combined approach—leveraging both pre‑game and in‑game ads—could theoretically give advertisers the best of both worlds, though it might also provoke greater pushback from players who value uninterrupted immersion. Xbox has pledged that any advertisements will be non‑intrusive.
By placing ads before the gameplay begins, the company aims to preserve the immersive experience once the player is inside the title. This approach benefits both gamers, who avoid disruption during play, and advertisers, who want their messages to be part of the experience rather than a nuisance. Relevance will be key.
No one wants to see an ad for cat food when they don’t own a cat, or a promotion for a game they have already completed. Contextual, targeted ads that make sense for the individual player will help prevent premature exits and give brands a more effective platform for reaching new audiences. Nonetheless, Xbox is venturing into largely uncharted territory. The first unknown is how players will react to pre‑game advertising; the second is whether the revenue generated will be sufficient to sustain the model over the long term.
The decision to explore ad‑supported game streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has shown a willingness to experiment with new business models. Time will reveal whether this gamble pays off.
Historically, many gaming ad campaigns have been built around a "watch an ad, earn an extra life" premise. Xbox’s proposal differs: it asks players to view an ad in order to access a game they already own.
Our existing data set does not yet indicate how this will be received. Nevertheless, research on ad format perception consistently shows that descriptors such as "non‑intrusive" and "immersive" rank among the most positively received.
If Xbox—and potentially other platforms—wish to make gaming ads a lasting success, these two attributes will be critical metrics to monitor. My forecast is that Xbox will neither be the first nor the last company to test this kind of approach.
Advertising in video games has existed for years, but it has rarely been designed with the player’s experience at the forefront. Should Xbox manage to strike the right balance, it could pave the way for similar initiatives across the industry and, more importantly, make video games considerably more accessible to everyday gamers.