Virginie Chesnais serves as chief marketing officer at the ad‑technology analytics firm Happydemics. For many years, gamers have looked at in‑game advertising with suspicion, and the wariness is understandable. The reputation of ads inside video games is mixed at best; players often encounter redirects to unrelated websites or apps, misleading content, or tiny close buttons that are hard to locate, all of which generate frustration.
A recent study from eMarketer highlighted that 52 percent of gamers would abandon a session if they ran into multiple disruptive advertising elements. Losing half of an audience at the very moment you are trying to engage them is hardly an effective strategy. Nevertheless, advertising does not have to be a negative experience. The same research indicated 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.
This suggests that well‑crafted advertising can enhance, rather than detract from, the gaming experience. Xbox is currently piloting an ad‑supported game‑streaming service at a time when the overall cost of playing is climbing steadily.
In this environment, premium, non‑intrusive ads could find a receptive home within the gaming ecosystem. The argument for a hybrid "ads‑for‑games" model is stronger than many assume, and it is already partially validated by the success of linear media platforms.
Services such as Netflix, Disney+, and other streaming giants have demonstrated that offering both subscription‑only and ad‑supported tiers can generate substantial revenue while expanding the audience base. Should Xbox’s experiment succeed, it would not only preserve revenue from existing subscribers but also unlock an entirely new income stream—something the brand could greatly benefit from given its current financial pressures. This development matters because console gaming is increasingly being positioned as a premium service.
Prices for games, consoles, accessories, and downloadable content continue to rise, creating a financial barrier for the average player. As Xbox noted in its announcement, well‑executed advertising has the potential to lower the cost of access to gaming experiences.
The mobile‑gaming sector already provides evidence that ad‑supported tiers can serve as an entry point for users who are unwilling or unable to pay large upfront fees. Importantly, any advertising model Xbox introduces would be optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are more price‑sensitive could opt into the ad‑supported tier. By offering a two‑tier system, Xbox aims to keep its loyal fan base satisfied while simultaneously making its library more approachable for newcomers. Although there is no concrete survey data on this specific launch yet, it is reasonable to predict that a large majority of gamers would tolerate a 30‑second commercial if it granted them an hour of gameplay on a favorite or new title. Xbox likely has internal data supporting this hypothesis.
Happydemics analyzed 285 in‑game advertising campaigns across the United Kingdom and North America and found that in‑game ads consistently outperformed television, social media, and other online formats in terms of ad recall and attribution. In other words, gamers are more likely to remember an ad they saw while playing and correctly associate it with the brand that delivered it. Xbox’s "around‑the‑game" approach—showing ads before the game starts rather than embedding them within the gameplay—adds another layer of interest.
Our data indicate that pre‑game placements generate higher recall and attribution scores compared with ads that appear directly inside the game environment. This distinction matters because while traditional TV or social ads may be remembered, they are not always linked to the correct brand in the consumer’s mind. Gaming appears to occupy a unique niche where brand‑to‑consumer connections are stronger, which explains why companies like Xbox and EA are increasingly exploring ad‑based revenue models. It is crucial to note that Xbox’s ads are not in‑game but pre‑game.
Intrinsic in‑game formats tend to excel further down the marketing funnel, delivering stronger lifts in brand image, consideration, interest, and likability. A combined strategy that leverages both pre‑game and in‑game ads could theoretically offer the best of both worlds for advertisers, though it might also provoke greater pushback from players who are sensitive to any interruption.
Xbox has pledged that the advertisements will be non‑intrusive. By placing ads before the gameplay begins, the company hopes to preserve the immersive experience that gamers value. This approach benefits not only players, who avoid interruptions during play, but also advertisers, who want their messages to be part of a seamless experience rather than a disruptive nuisance.
Relevance will be key. No gamer wants to see an advertisement for cat food when they do not own a cat, or for a game they have already completed.
Contextual, targeted ads that align with a player’s interests can keep users engaged and prevent them from abandoning the session at the first sign of an irrelevant commercial. For brands, this relevance translates into a more effective platform for reaching new audiences.
Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how the gaming community will react to a regular stream of pre‑game ads; 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 demonstrated a willingness to experiment with new business models. Only time will reveal whether this gamble pays off.
Historically, many gaming ad campaigns have relied on "watch an ad, get an extra life" mechanics. Xbox’s proposal differs: it asks players to watch an ad in order to access a game they already own.
Our existing data set does not yet provide insight into how this specific exchange will be perceived. However, broader research on ad format perception shows that when respondents are asked to describe the formats they remember positively, terms such as "non‑intrusive" and "immersive" frequently appear among the top descriptors.
If Xbox and future adopters want to make gaming ads a lasting success, these two qualities will need to be carefully monitored and optimized. My forecast is that Xbox will neither be the first nor the last company to test this kind of approach. Advertising has been part of video games for decades, but it has rarely been designed with the player’s experience as the primary focus. Should Xbox manage to strike the right balance, it could pave the way for other publishers to adopt similar models, ultimately making video games more affordable and accessible for everyday gamers.