Virginie Chesnais serves as chief marketing officer at the ad‑tech analytics firm Happydemics. For many years, gamers have approached in‑game advertising with suspicion, and their concerns are not unfounded.
The reputation of ads in video games is mixed at best; players often encounter redirects to unrelated websites or apps, deceptive messaging, or hidden close buttons that are difficult to locate, all of which generate frustration. A recent study conducted by eMarketer highlighted that 52 percent of gamers would abandon a session if they ran into multiple intrusive ad elements. Losing half of your audience at the moment you are trying to engage them is hardly an effective strategy.
However, advertisements do not have to be detrimental. 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 high quality and relevance.
With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, well‑crafted advertisements could find a natural home within the gaming ecosystem. The argument for incorporating an ads‑for‑games model is more compelling than many anticipate, a notion already validated to some degree by linear media platforms. Services such as Netflix, Disney+, and other streaming giants have demonstrated that offering a lower‑cost, ad‑supported tier can generate substantial revenue while keeping a broad subscriber base.
If Xbox’s experiment succeeds, it would not only preserve its paying customers but also unlock a brand‑new, previously untapped income stream at a moment when the company could greatly benefit from additional cash flow. This development matters because console gaming is increasingly being positioned as a premium experience.
Prices for games, consoles, accessories, and downloadable content have risen sharply, making it harder for the average consumer to justify the expense. As Xbox noted in its announcement, advertising, when executed correctly, can lower the barrier to entry and make gaming more affordable. Mobile gaming has already shown that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases.
Importantly, the ad‑supported option would be entirely optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those who are comfortable with occasional ads could enjoy a reduced‑price or even free access model.
By offering a two‑tier system, Xbox aims to retain its loyal fan base while simultaneously expanding accessibility for newcomers. Although no formal survey data exists yet on this particular rollout, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second commercial if it granted them an hour of gameplay on a beloved 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 indicates that in‑game advertising consistently outperforms television, social media, and other online formats in terms of ad recall and attribution.
In other words, players are more likely to remember an ad they saw while gaming and correctly associate it with the sponsoring brand. Xbox’s “around‑the‑game” approach—showing ads before the game begins rather than embedding them within the gameplay itself—adds another layer of advantage.
Our data reveal that pre‑game placements generate higher recall and attribution scores compared with intrinsic in‑game placements. This distinction matters because, while we may remember a commercial seen on TV or a banner on a social feed, those impressions do not always translate into clear brand connections.
Gaming appears to occupy a unique position where recall and attribution are especially strong, which likely explains why companies such as Xbox and Electronic Arts are increasingly exploring ad‑based models. It is crucial to note that Xbox’s ads are pre‑game, not 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 hybrid strategy that combines both pre‑game and in‑game ads could theoretically offer advertisers the best of both worlds, but it also risks provoking greater pushback from players who are sensitive to any interruption.
Xbox has pledged that its advertisements will not be intrusive. By placing ads before gameplay starts, the company hopes to preserve the immersive experience that gamers value. This approach benefits both players—who enjoy uninterrupted sessions—and advertisers, who want their messages to complement rather than disrupt the gaming experience. Relevance will be key to the success of Xbox’s ad model.
Nobody wants to see an advertisement for cat food when they don’t own a cat, or a promo for a game they have already completed. Contextual, well‑targeted ads that align with a player’s interests can prevent annoyance and increase the likelihood that users will stay engaged long enough to view the ad. Nevertheless, Xbox is navigating uncharted territory. The first unknown is how players will react to this new format; 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 appears willing to experiment with innovative monetisation strategies. Only time will reveal whether this gamble pays off.
Historically, many gaming ad campaigns have followed a “watch an ad, earn an extra life” structure. Xbox’s proposal differs: players would watch an ad to access a game they already own, rather than receiving a tangible in‑game reward. Our existing data set does not yet indicate how this will be received.
Research on ad‑format perception, however, offers some optimism. When participants who remembered an ad were asked to describe the format using positive adjectives, “non‑intrusive” and “immersive” emerged as the most common descriptors.
If Xbox and future adopters aim to make advertising a staple of the gaming experience, these two attributes will be critical to monitor. My forecast is that Xbox will neither be the first nor the last platform to trial such a strategy. Advertising in games has existed for years, but it has rarely been designed with the player’s experience at its core. Should Xbox manage to strike the right balance, it could pave the way for other gaming companies to follow, ultimately making video games more affordable and accessible for everyday gamers worldwide.