Virginie Chesnais serves as Chief Marketing Officer at the ad‑tech analytics firm Happydemics. For many years, gamers have looked at in‑game advertising with suspicion, and the wariness is understandable.
The reputation of ads in video games is mixed at best; players frequently encounter redirects to unrelated sites or apps, misleading content, or tiny, hard‑to‑find close buttons that make the experience frustrating. A recent study by eMarketers highlighted that 52 % of gamers would abandon a session if they ran into several disruptive ad elements. Losing half of an audience the moment you try to engage them is hardly a winning tactic.
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 platform and the overall cost of playing continuing to climb, premium‑grade ads could find a welcoming niche within the gaming ecosystem. The argument for a modest "ads‑for‑games" arrangement is more compelling than many assume, especially when we look at the success of linear media models.
Services such as Netflix, Disney+ and other streaming giants have demonstrated that a hybrid model—offering both ad‑free and ad‑supported tiers—can generate substantial revenue while keeping a broad subscriber base. Should Xbox’s experiment prove effective, it could not only preserve its paying subscribers but also unlock a brand‑new revenue stream at a moment when the company is eager for fresh income. This is significant because console gaming is increasingly positioned as a premium offering. The price tags attached to new consoles, full‑price games, accessories, and downloadable content (DLC) are becoming harder for the average consumer to justify, erecting a barrier that keeps many potential players on the sidelines.
Xbox itself has stated that, when executed correctly, advertising can lower the barrier to entry for gamers. Mobile gaming already provides a clear example: ad‑supported tiers let players dip their toes into a title without paying a large upfront fee, often in exchange for watching short commercials. Crucially, this model would remain entirely optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are price‑sensitive could opt into the ad‑supported tier.
By offering a two‑track system, Xbox hopes to retain its core fan base while simultaneously expanding accessibility for newcomers. Although we lack concrete survey data on this particular announcement, it is reasonable to wager that a large majority of gamers would tolerate a 30‑second commercial if it meant gaining an hour of playtime on a beloved or brand‑new title.
Xbox’s own analytics are likely to confirm this intuition. Data from Happydemics covering 285 in‑game campaigns across the United Kingdom and North America indicate that in‑game advertising consistently outperforms television, social media, and other online formats when it comes to 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 gameplay begins rather than embedding them within the virtual world—adds another layer of interest.
Our research shows that these pre‑game placements achieve higher recall and attribution scores compared with ads that appear directly inside the game environment. The distinction matters because, while we may recall a commercial seen on TV or a sponsored post while scrolling through Instagram, that memory does not always translate into a clear brand connection. Gaming appears to occupy a unique space where recall and brand linkage are stronger, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based models. It is important to note, however, that Xbox’s ads are not in‑game; they are pre‑game.
Traditional in‑game formats tend to excel further down the conversion funnel, delivering better results for brand‑image uplift, consideration, interest, and overall likability. A hybrid strategy that blends pre‑game and in‑game ads could theoretically give advertisers the best of both worlds, but it also runs the risk of provoking greater pushback from players who are sensitive to any form of interruption.
Xbox has pledged that its advertisements will be non‑intrusive, a promise that makes sense when the ads are displayed before the actual gaming session. By keeping the ads out of the immersive experience itself, Xbox protects both the player’s enjoyment and the advertiser’s desire for a seamless integration that feels like part of the overall journey rather than a disruption.
Relevance will be another key factor. No gamer wants to see an advertisement for cat food when they don’t own a cat, or a promotion for a game they have already completed. By delivering contextual, well‑targeted ads, Xbox can keep players from abandoning the session at the first sign of an irrelevant commercial, while simultaneously giving brands a highly effective platform to reach fresh audiences. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to the presence of ads in a console environment; the second is whether the advertising revenue 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. Only time will reveal whether this gamble pays off. Historically, our work in gaming advertising has often revolved around “watch an ad, earn an extra life” mechanics.
Xbox’s proposal, by contrast, asks players to watch an ad simply to access a game they already own. Our existing data set does not yet indicate how this will be received.
Nevertheless, broader research on ad‑format perception shows that when participants are asked to describe ads they remember, terms like “non‑intrusive” and “immersive” frequently emerge as top descriptors. If Xbox—and potentially other platforms in the future—are to make gaming ads successful, these two qualities will need to be closely monitored and optimized.
My forecast is that Xbox will neither be the first nor the last company to test this approach. Advertising has been part of gaming for many years, but rarely with the player experience as the primary focus.
Should Xbox manage to strike the right balance, it could pave the way for similar strategies across the industry and, more importantly, make video games far more affordable and reachable for everyday gamers.