Virginie Chesnais serves as chief marketing officer at Happydemics, an ad‑technology analytics firm. 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; players often encounter redirects to unrelated sites, misleading content, or tiny, hard‑to‑find close buttons that frustrate the experience. A recent study from eMarketer revealed that 52 percent of gamers would abandon a session if they ran into multiple intrusive ad elements.
Losing half of your audience at the moment you’re trying to engage them is hardly an effective approach. Nevertheless, advertisements do not have to be detrimental. 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 high quality and relevance.
This suggests that, when executed well, ads can become a positive element rather than a nuisance. Xbox is currently piloting an ad‑supported game‑streaming service at a time when the overall cost of playing is climbing.
In such an environment, well‑crafted ads could find a receptive home within the gaming ecosystem. The rationale for introducing an ad‑for‑games model is more compelling than many anticipate, and it has already been demonstrated to some extent in linear media. Services like Netflix, Disney+ and other streaming platforms have shown that a tiered model—offering both ad‑free and ad‑supported subscriptions—can generate substantial revenue while expanding the audience base.
If Xbox’s experiment succeeds, it could not only preserve its existing paying subscriber base but also unlock a previously untapped revenue stream, which is especially valuable as the brand seeks new growth avenues. This development matters because console gaming is increasingly being positioned as a premium offering.
The price tags on games, consoles, accessories, and downloadable content continue to rise, creating a financial barrier for the average player. Xbox itself has stated that, when implemented correctly, advertising can help lower the cost of entry to gaming. Mobile gaming already illustrates how ad‑supported tiers can give players a foothold without requiring a large upfront purchase.
Crucially, participation would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads. By providing a two‑tier system, Xbox aims to keep its loyal fan base while simultaneously making games more accessible to newcomers who might otherwise be priced out.
Although there is no specific survey data on the current announcement, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it granted them an hour of playtime on a favorite or new title. Xbox likely has internal data supporting this hypothesis.
Happydemics analyzed 285 in‑game campaigns across the United Kingdom and North America and found that in‑game advertisements consistently outperform television, social media, and other online formats in terms of ad recall and attribution. In other words, players are more likely to remember an ad they saw while gaming and correctly associate it with the brand that displayed it.
Xbox’s "around‑the‑game" approach—showing ads before the game launches rather than embedding them within the gameplay—adds another layer of interest. Our data indicate that pre‑game placements achieve higher recall and attribution scores compared with ads that appear directly inside the game environment. The distinction is important because, while we can often remember ads encountered on TV or in social feeds, those memories do not always translate into a clear brand connection.
Gaming appears to operate in its own league regarding this metric, which likely explains why companies such as Xbox and EA are increasingly exploring ad‑based gaming models. It is also worth noting that Xbox’s ads are not in‑game but pre‑game.
Traditional in‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likeability. A hybrid strategy that combines both pre‑game and in‑game ads could theoretically provide the best of both worlds for advertisers, though it might also provoke greater pushback from players who value an uninterrupted experience. Xbox has pledged that the ads will be non‑intrusive.
By placing advertisements before the gameplay begins, the company aims to preserve the immersive nature of the experience. This approach benefits both gamers—who avoid interruptions during play—and advertisers, who want their messages to be part of the experience rather than a disruption. Relevance will be key.
No player wants to see a commercial for cat food if they don’t own a cat, or a promotion for a game they have already completed. Contextual, well‑targeted ads can keep players from abandoning the session while providing brands with an effective platform to reach new audiences. Nevertheless, Xbox is navigating 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 new business models.
Only time will reveal whether this gamble pays off. Historically, many of our gaming‑ad initiatives have revolved 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. Our existing data set does not yet indicate how this will be received.
Related research on ad‑format perception shows that when participants recall an ad, they often describe it as "non‑intrusive" and "immersive," which were among the top positive descriptors in our surveys. If Xbox—and potentially other platforms—aim to make advertising in gaming successful, these two attributes will be essential metrics to monitor. In my view, Xbox will not be the first nor the last company to test such a strategy. Advertising has been part of gaming for years, but rarely with the player experience at the forefront.
Should Xbox manage to strike the right balance, it could pave the way for similar initiatives across the industry and, more importantly, make video games far more affordable and reachable for the everyday gamer.