Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have approached in‑game advertising with suspicion, and their wariness is understandable.
The reputation of ads in video games is mixed at best; players often encounter redirects to unrelated websites or apps, misleading content, and close buttons that are difficult to locate, all of which fuel frustration. A recent study conducted by eMarketer highlighted that 52 % of gamers would abandon a session if they ran into several intrusive ad elements. Losing half of an audience at the very moment you’re trying to engage them is hardly an effective tactic.
However, advertisements do not have to be synonymous with annoyance. The same research indicated that one in five gamers would actually increase the frequency with which they played a title if the in‑game ads were of a high quality and felt relevant. This is where Xbox’s experimental ad‑supported game‑streaming service enters the conversation. With the price of playing games steadily climbing, the prospect of well‑crafted, non‑intrusive ads could find a receptive home within the gaming ecosystem.
The rationale for offering an ad‑for‑games model is more compelling than many assume, and it is already partially validated by the success of linear media. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that a dual‑tier approach—providing both ad‑free and ad‑supported subscription levels—can generate substantial revenue while expanding the audience base. Should Xbox’s strategy prove effective, it would not only preserve its existing paying subscriber pool but also unlock an entirely new revenue stream at a moment when the brand is seeking fresh financial avenues.
The importance of this development cannot be overstated. Console gaming is increasingly positioned as a premium experience. The cost of new releases, console hardware, accessories, and downloadable content has risen to a point where many casual players find it difficult to justify the expense, creating a barrier to entry for the average gamer. Xbox itself has acknowledged that, when executed correctly, advertising can lower the cost of accessing games.
The mobile gaming sector already offers a clear precedent: ad‑supported tiers enable players to engage with titles without paying large upfront fees, thereby widening the market. Crucially, this model remains optional. Players who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads.
By presenting a two‑tier system, Xbox aims to keep its loyal fanbase satisfied while simultaneously making games more approachable for newcomers. Although there is no specific survey data on this particular announcement yet, it is reasonable to predict that a large majority of gamers would tolerate a 30‑second commercial if it meant they could enjoy an hour of their favorite game—or even a brand‑new title—without paying extra.
Xbox likely has internal data supporting this assumption. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America reveals that in‑game advertisements consistently outperform traditional TV, social media, and online display ads in terms of recall and attribution. Players are more likely to remember an ad they saw while playing and correctly associate it with the sponsoring brand. This is where Xbox’s “around‑the‑game” strategy—placing ads outside the actual gameplay, such as pre‑game slots—becomes intriguing.
Our data show that these peripheral formats achieve higher recall and attribution scores compared with ads embedded directly within the game world. The distinction matters because, while we can often recall ads seen on television or scrolling through a feed, we do not always link those impressions to a specific brand. Gaming appears to operate in its own league regarding this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based gaming models. It is essential to note that Xbox’s ads are not in‑game but pre‑game.
Traditional in‑game ad formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likeability. A hybrid approach that combines pre‑game and in‑game placements 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, a claim that makes sense when the ads appear before the gaming session begins.
This timing ensures that the core immersive experience remains untouched, a factor that matters to both gamers and advertisers who want their messages to complement rather than disrupt gameplay. Relevance will be another critical factor.
Nobody wants to see an advertisement for cat food when they don’t own a cat, or a promotion for a game they have already completed. By delivering contextual ads that are pertinent to the player’s interests, Xbox can keep users from abandoning the experience while giving brands a highly effective platform to reach new audiences.
Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how players will react to this 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 game streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has shown a willingness to experiment with innovative ideas. Only time will reveal whether this gamble pays off. Historically, many of our gaming‑ad projects have revolved around “watch an ad, earn an extra life” mechanics. Xbox’s proposal is different: it asks players to view an ad in order to access a game they already own.
Our current data set does not yet indicate how this will be received. However, broader research on ad‑format perception—where respondents who recall an ad are asked to describe it using positive adjectives—consistently highlights “non‑intrusive” and “immersive” as top descriptors.
If Xbox and future adopters aim to make advertising a staple in gaming, these two qualities will be vital metrics to monitor. My forecast is that Xbox will neither be the first nor the last platform to test such strategies.
Advertising in games has existed for years, but it has rarely been designed with the player’s experience at the forefront. Should Xbox succeed, it could pave the way for other developers and publishers to adopt similar models, ultimately making video games more affordable and accessible for the everyday gamer.