Virginie Chesnais serves as chief marketing officer at the ad‑technology analytics firm Happydemics. For many years, gamers have approached in‑game advertising with suspicion, and that wariness is understandable.
The reputation of ads in video games is mixed at best: players often encounter redirects to unfamiliar websites or apps, deceptive messaging, or tiny, hard‑to‑find close buttons that frustrate the experience. A recent study by eMarketer highlighted that 52 % of respondents would abandon a game after encountering multiple disruptive ad elements. Losing half of your audience the moment you try to monetize them is hardly a winning strategy.
However, advertising does not have to be a negative force. The same research revealed that one in five gamers would actually increase the frequency with which they play a title if the ads were high‑quality and unobtrusive. 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 receptive home within the medium. The idea of offering a gaming‑specific ad model is more appealing than some might assume, especially when we look at the success of linear media.
Services such as Netflix, Disney+ and other streaming platforms have demonstrated that a hybrid approach—combining a paid tier with an ad‑supported tier—can generate substantial revenue while expanding the audience base. Should Xbox’s experiment prove fruitful, it would not only preserve its subscription‑based revenue but also unlock a previously untapped source of income at a moment when the brand is eager for fresh cash flow. This development matters because console gaming is increasingly positioned as a premium offering.
Prices for games, consoles, accessories, and downloadable content keep rising, making it harder for the average consumer to justify the expense. Xbox itself has stated that, when executed correctly, advertising can lower the barrier to entry for gamers. The mobile‑gaming sector already illustrates how ad‑supported tiers can welcome new players without demanding large upfront payments. Crucially, any ad model would be optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those willing to watch ads could access the same content at a reduced cost. By providing a two‑tier system, Xbox hopes to keep its loyal fanbase satisfied while simultaneously opening the door for newcomers who might otherwise be deterred by price. Although there is no specific survey data on Xbox’s latest announcement, it is reasonable to assume that most gamers would tolerate a brief 30‑second advertisement if it meant earning an hour of playtime on a favorite or new title. Happydemics’ analysis of 285 in‑game campaigns across the UK and North America shows that in‑game ads consistently out‑perform television, social media, and other online formats in terms of recall and attribution.
Players are more likely to remember an ad they saw while gaming and to correctly associate it with the sponsoring brand. Xbox’s “around‑the‑game” approach—displaying ads before a session begins rather than embedding them within the gameplay—adds another layer to this picture. Our data indicate that pre‑game placements generate stronger recall and attribution than ads that appear directly inside the game world.
This distinction matters because, while viewers can recall ads seen on TV or scrolling through feeds, they do not always link those impressions to the corresponding brands. Gaming appears to be in a league of its own for brand‑memory metrics, which likely explains why companies such as EA and Xbox are increasingly exploring ad‑based models. It is important to note that Xbox’s ads are pre‑game, not in‑game.
In‑game formats tend to excel later in the funnel, delivering higher lifts in brand image, consideration, interest, and likeability. A combined strategy—leveraging both pre‑game and in‑game ads—could offer advertisers the best of both worlds, though it might also provoke greater pushback from players who value an uninterrupted experience. Xbox has pledged that its ads will not be intrusive. By placing them before the gameplay starts, the company aims to preserve the immersive quality of the session.
This is a win‑win: players avoid interruptions during the core experience, and advertisers gain a slot that feels integrated rather than disruptive. Relevance will be key.
Nobody enjoys seeing an advertisement for cat food when they don’t own a cat, or a promo for a game they have already completed. Contextual, targeted ads that make sense for the individual player will help prevent abandonment and provide brands with a high‑quality platform to reach fresh audiences.
Nevertheless, Xbox is navigating uncharted territory. The first unknown is how gamers will react to a new ad format; the second is whether the revenue generated will justify a long‑term commitment to the model.
The move toward ad‑supported streaming reflects the boldness of Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment. Only time will reveal whether this gamble pays off.
Historically, many gaming ad campaigns have been built around “watch an ad, get an extra life” mechanics. Xbox’s proposal differs: players would watch an ad to access a game they already own, rather than receiving an in‑game reward. Our dataset does not yet show how this will be received, but broader research on ad‑format perception indicates that descriptors such as “non‑intrusive” and “immersive” rank among the most positive.
If Xbox and future adopters can meet those expectations, the model could become sustainable. In my view, Xbox will neither be the first nor the last platform to experiment with this approach. Advertising has existed in gaming for years, but rarely with the player’s experience as the primary focus. Should Xbox succeed, it could pave the way for other developers and publishers to adopt similar strategies, ultimately making video games more affordable and accessible for everyday players.