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 the wariness is not unfounded. The reputation of ads in video games is mixed; players often encounter redirects to unrelated sites, misleading content, or dismiss buttons that are difficult to locate, all of which lead to frustration.
A recent study from eMarketer highlighted that 52 % of gamers would stop playing if they ran into several intrusive ad elements. Losing half of an audience at the moment you are trying to engage them is hardly an effective approach.
Nevertheless, advertising does not have to be a negative experience. The same research indicated that one in five players would actually increase the frequency with which they play a title if the in‑game advertisements were of high quality and relevance.
With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming steadily climbing, well‑crafted ads could find a welcoming niche within the medium. The rationale for introducing a modest ad‑for‑games model is more compelling than many assume, a notion already validated to some degree by linear media.
Services such as Netflix, Disney+ and other streaming platforms have demonstrated that a steady subscription revenue can be complemented by an ad‑supported tier, creating a lucrative dual‑revenue stream. Should Xbox’s experiment succeed, it would not only preserve its paying subscriber base but also unlock a brand‑new, previously untapped source of income at a moment when the company could greatly benefit from additional cash flow. This development matters because console gaming is increasingly positioned as a premium offering.
Prices for games, consoles, accessories and downloadable content continue to rise, making it harder for the average consumer to justify the expense and erecting a barrier for casual gamers. Xbox itself has stated that, when executed correctly, advertising can lower the cost of entry to gaming.
Mobile gaming already provides a clear precedent: ad‑supported tiers allow players to experience games without the need for large upfront purchases, expanding the overall market. Importantly, participation would be optional. Players who prefer an ad‑free experience could continue to pay a subscription fee, while those who are comfortable with occasional ads could enjoy a reduced cost. By offering a two‑tier system, Xbox aims to keep its loyal fan base satisfied while simultaneously making games more approachable for newcomers.
Although there is currently no published survey data on this specific launch, it is reasonable to assume that the majority of gamers would tolerate a 30‑second commercial if it meant gaining an hour of gameplay on a favorite or new title. Xbox likely has internal data supporting that assumption.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows 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 see while playing and to correctly associate it with the sponsoring brand. This is where Xbox’s “around‑the‑game” strategy—advertisements that appear before the game starts rather than embedded within the gameplay—becomes intriguing. Our data indicate that these pre‑game placements achieve higher recall and attribution scores compared with intrinsic in‑game spots.
The distinction matters because, while we can often recall ads seen on TV or scrolling through a feed, we do not always link those impressions to a specific brand. Gaming appears to occupy a unique position where the connection between ad and brand is stronger, which likely explains why companies like Xbox and EA are exploring ad‑based models more aggressively. It is crucial to note that Xbox’s ads are pre‑game, not in‑game.
Traditional in‑game formats tend to excel later in the conversion funnel, delivering stronger lifts in brand image, consideration, interest and likability. A blended approach that combines pre‑game and in‑game ads could theoretically offer advertisers the best of both worlds, though it might also provoke greater resistance from players.
Xbox has promised that the ads will be non‑intrusive. By placing commercials before the gameplay begins, they avoid interrupting the immersive experience that gamers cherish. This consideration benefits both the player—who enjoys an uninterrupted session—and the advertiser, who wants their message to be received as part of the experience rather than as a disruption. Relevance will be key.
No gamer wants to see an advertisement for cat food when they don’t own a cat, or for a game they have already completed. By delivering contextual, purpose‑driven ads, Xbox can keep players from abandoning a session while giving brands a highly engaged audience. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to a new ad 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 streaming reflects the boldness of Xbox CEO Asha Sharma, who has shown a willingness to experiment with unconventional strategies. Only time will reveal whether the approach will meet expectations. Historically, many gaming ad campaigns have relied on the classic “watch an ad, earn an extra life” trade‑off.
Xbox’s proposition is different: players would watch an ad to gain access to a game they already own. Our existing data set does not yet indicate how this will be received. However, broader research on ad‑format perception—where participants who recall an ad are asked to select positive descriptors—consistently highlights “non‑intrusive” and “immersive” as top attributes.
If Xbox and future adopters wish to succeed with gaming ads, they must prioritize these qualities. My forecast is that Xbox will not be the first nor the last platform to trial such a model. Advertising in 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 other developers and publishers to follow, ultimately making video games more affordable and accessible for everyday gamers.