Virginie Chesnais serves as chief marketing officer at the ad‑technology analytics firm Happydemics. For many years, gamers have viewed in‑game advertising with suspicion, and that wariness is understandable.
The reputation of ads in video games is mixed at best, often plagued by annoying redirects, misleading content, or hide‑away close buttons that frustrate users. A recent study by eMarketer highlighted that 52 % of players would abandon a session if they encountered multiple disruptive ad elements.
Losing half of your audience at the moment you’re trying to engage them is hardly an effective approach. However, advertisements do not have to be a negative experience.
The same research revealed that one in five gamers would actually play a title more often if the in‑game ads were high‑quality and well‑executed. This suggests a potential appetite for well‑designed advertising when it adds value rather than detracts from gameplay. 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 welcoming home within the gaming ecosystem.
The argument for a hybrid "ads‑for‑games" model is stronger than many anticipate, and it has already been demonstrated in the linear‑media world. Services such as Netflix, Disney+, and other streaming platforms have proven that offering both ad‑free and ad‑supported tiers can generate substantial revenue while expanding the audience base. If Xbox’s experiment succeeds, it could preserve its paying subscriber base and simultaneously unlock a fresh, previously untapped revenue stream—something the brand urgently needs. This development matters because console gaming is increasingly positioned as a premium offering.
Prices for games, consoles, accessories, and downloadable content continue to rise, creating a financial barrier for the average player. Xbox itself has noted that, when executed correctly, advertising can lower the cost of entry to gaming.
Mobile gaming already shows that ad‑supported tiers can provide a gateway for players who are reluctant to make large upfront purchases. Crucially, any advertising model Xbox adopts would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those willing to tolerate a short commercial could enjoy a reduced‑price or free tier.
By presenting a two‑tier system, Xbox aims to keep its loyal fanbase happy while also making games more reachable for newcomers. Although there is no specific survey data on Xbox’s new plan yet, it is reasonable to assume that most gamers would tolerate a 30‑second ad if it meant gaining an hour of gameplay on a favorite or new title. Happydemics data from 285 in‑game campaigns across the UK and North America indicate that in‑game ads consistently outperform TV, social, and online ads in terms of recall and attribution. Players are more likely to remember an ad they see while playing and correctly associate it with the brand behind it.
Xbox’s “around‑the‑game” strategy—showing ads before the game loads rather than during play—adds another layer of appeal. Our research shows that pre‑game placements achieve higher recall and attribution scores compared with ads embedded directly within the gameplay environment. This distinction matters because, while we often remember ads seen on television or social feeds, those memories do not always translate into brand linkage. Gaming appears to excel at creating that connection, which explains why companies like Xbox and EA are exploring ad‑based models more aggressively.
It is important to note that Xbox’s ads will be pre‑game, not in‑game. Traditional in‑game formats tend to perform better later in the conversion funnel, boosting brand‑image uplift, consideration, interest, and likability.
A combination of pre‑game and in‑game ads could theoretically give advertisers the best of both worlds, but it also risks provoking stronger pushback from players who value an uninterrupted experience. Xbox has pledged that its ads will not be intrusive. By placing commercials before the gameplay begins, the company hopes to preserve the immersive nature of the experience. This approach benefits both players—who avoid interruptions during play—and advertisers, who want their messages to be part of the experience rather than a nuisance.
Relevance will be key. No gamer wants to see an ad for cat food when they don’t own a cat, or an advertisement for a game they have already completed. Contextual, targeted ads that make sense for the individual player will help prevent immediate drop‑offs and give brands a high‑quality 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 move toward ad‑supported streaming reflects a bold strategy by Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment and take calculated risks. Only time will reveal whether the gamble pays off.
Historically, many gaming ad models have been built around "watch an ad, get an extra life" incentives. Xbox’s proposal differs: players would watch an ad to access a game they already own, rather than receiving a direct in‑game reward.
Our existing data set does not yet show how this particular trade‑off will be received. Research on ad‑format perception does, however, provide some optimism.
When respondents who remembered an ad were asked to describe the format, terms like "non‑intrusive" and "immersive" were among the most frequently chosen. If Xbox—and potentially other platforms in the future—aim to make gaming ads successful, these two attributes will be critical performance metrics. My forecast is that Xbox will neither be the first nor the last to test this 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, ultimately making video games more affordable and accessible for everyday players.