Virginie Chesnais serves as the chief marketing officer for the ad‑technology 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, with common grievances ranging from redirects to unrelated websites or apps, misleading content, and the frustration of trying to locate a tiny close button that seems almost impossible to find. A recent study conducted by eMarketer revealed that 52 % of players would abandon a session if they encountered multiple intrusive ad elements. Losing half of your audience at the very moment you are trying to engage them is hardly a winning formula. Nevertheless, advertisements do 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 a high caliber and felt relevant. 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 welcoming niche within the medium. The argument for introducing an "ads‑for‑games" model is more compelling than many might assume, and it has already been partially validated by linear media.
Platforms such as Netflix, Disney+, and other streaming services have demonstrated that offering both ad‑free and ad‑supported tiers can generate substantial revenue while still delivering a consistent service. If Xbox’s experiment proves successful, it could not only preserve its paying subscriber base but also unlock a completely new revenue stream at a moment when the brand is seeking fresh sources of income. This development matters because console gaming is increasingly being positioned as a premium offering. The price tags attached to games, consoles, peripherals, and downloadable content are becoming harder for the average consumer to justify, creating a financial barrier that excludes many potential players.
Xbox itself has stated that, when executed correctly, advertising can help lower the cost of access to gaming experiences. The mobile‑gaming sector has already shown that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases. Crucially, the system would be entirely optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are comfortable with occasional commercials could enjoy a reduced‑price or even free entry point.
By offering a two‑tier model, Xbox aims to retain its loyal community while simultaneously expanding accessibility for newcomers. Although no formal survey data on this particular launch is available yet, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it meant gaining an hour of playtime on a beloved or brand‑new title. Xbox likely has internal data that supports this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America demonstrates that in‑game advertising consistently outperforms television, social media, and other online formats in terms of ad recall and attribution. Players are more likely to remember an ad they saw while gaming and to correctly associate it with the sponsoring brand. This is where Xbox’s “around‑the‑game” approach—ads that appear before the gameplay begins rather than embedded within the game world—becomes particularly intriguing. Our data indicate that pre‑game placements generate a clear advantage in recall and attribution when compared with intrinsic in‑game placements.
The significance lies in the fact that, while we can often remember ads seen on TV or scrolling through a social feed, we do not always link those impressions to the correct brand. Gaming appears to occupy a unique position in this respect, which likely explains why companies such as Xbox and Electronic Arts are increasingly exploring ad‑based models.
It is important to note that Xbox’s ads are not woven into the gameplay itself; they are shown beforehand. 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, though it may also provoke greater pushback from players who value an uninterrupted experience.
Xbox has pledged that its advertisements will be non‑intrusive. By placing ads before the game starts, the company aims to preserve the immersive nature of the session. This consideration benefits both the player—who can enjoy a seamless experience—and the advertiser, who wants their message to be part of the experience rather than a disruptive interruption. Relevance will be key.
No gamer wants to see an ad for cat food when they do not own a cat, or for a game they have already completed. By delivering contextual, targeted ads that make sense for the individual user, Xbox can minimize the risk of players abandoning the session at the sight of an irrelevant commercial, while simultaneously providing brands with an effective platform to reach new audiences. Nevertheless, 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. Only time will reveal whether this strategy will meet its objectives. Historically, our work in gaming advertising has focused on "watch an ad, earn an extra life" type exchanges.
Xbox, by contrast, is asking players to watch an ad simply to access a game they already own. Our existing dataset does not provide a clear answer on how this will be received.
However, broader research on ad‑format perception shows that when respondents are asked to describe ads they remember positively, terms such as "non‑intrusive" and "immersive" frequently top the list. If Xbox—and potentially other platforms in the future—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 model. Advertising has been part of gaming for many years, but rarely with the player’s experience as the central focus.
Should Xbox manage to strike the right balance, it could pave the way for other publishers to follow suit, ultimately making video games more affordable and accessible for the everyday gamer.