Virginie Chesnais serves as the 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 or apps, misleading content, or obscure close buttons that make dismissing an ad frustrating.
A recent study by eMarketer revealed that 52 % of gamers would stop playing if they ran into several disruptive ad elements. Losing half of your audience at the moment you’re 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 gamers would actually increase the frequency with which they played a title if the in‑game ads were of high quality. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of playing games continuing to climb, well‑crafted advertisements could find a receptive home in the gaming ecosystem. The argument for integrating a form of "ads‑for‑games" model is stronger than many assume, and it has already been demonstrated to some extent in linear media. Services such as Netflix, Disney+, and other streaming platforms have proven that a hybrid model—offering both ad‑free subscriptions and lower‑cost, ad‑supported tiers—can generate substantial revenue while expanding the audience base.
If Xbox’s experiment proves successful, it could not only preserve its paying subscriber base but also unlock a brand‑new revenue stream at a moment when the company is eager for fresh income. This development matters because console gaming is increasingly being positioned as a premium product. The price tags on new consoles, games, accessories, and downloadable content have risen sharply, making it more difficult for the average consumer to justify the expense.
Xbox itself has acknowledged that, when executed correctly, advertising can lower the barrier to entry for gamers. Mobile gaming has already shown that ad‑supported tiers allow players to engage with games without the need for large upfront purchases. Crucially, any ad‑based option would be optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those willing to tolerate brief advertisements could access games at a reduced cost. By offering a two‑tier system, Xbox aims to keep its core community of loyal fans while simultaneously opening the door to newcomers who might otherwise be priced out. Although there is no concrete survey data on this specific announcement yet, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second commercial if it meant they could play a favorite title or a new release for an hour. Xbox likely has internal data that supports this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America demonstrates that in‑game advertising consistently outperforms TV, social, and other online formats in terms of ad recall and attribution. Players tend to remember and correctly associate the brands they see within a game environment far better than those they encounter on traditional media channels. Xbox’s "around‑the‑game" strategy—showing ads before the gameplay begins rather than embedding them within the game world—adds another layer to this advantage. Our data show that pre‑game placements generate higher recall and attribution scores compared with ads that appear directly inside the game.
This distinction is important because, while we can often recall an ad seen on television or while scrolling through a feed, we do not always link it to the brand that served it. Gaming appears to occupy a unique position in this regard, which explains why companies like Xbox and EA are increasingly exploring ad‑based models. It is also worth noting that Xbox’s ads are planned to be pre‑game rather than in‑game. In‑game formats tend to excel further down the marketing funnel, delivering stronger lifts in brand image, consideration, interest, and likeability.
A blended approach—combining both pre‑game and in‑game ads—could theoretically offer the best of both worlds for advertisers, though it might also provoke greater resistance from players who are sensitive to interruptions. Xbox has pledged that the advertisements will not be intrusive.
By placing ads before the game starts, the company aims to preserve the immersive experience once gameplay begins. This is a critical consideration for both the player and the advertiser; campaigns need to feel integrated rather than disruptive.
Relevance will be key. No gamer wants to see an ad for cat food when they don’t own a cat, or for a game they have already completed. Contextual, targeted ads that make sense in the moment will help prevent players from abandoning the experience at the sight of an irrelevant commercial, while also giving brands a more effective platform to reach new audiences. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to the presence of ads; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The move toward ad‑supported game 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 this approach pays off. Historically, many gaming ad campaigns have been built around a "watch an ad, earn an extra life" premise.
Xbox’s proposal, however, asks players to watch an ad simply to access a game they already own. Our existing data set does not yet indicate how this will be received. Research on ad‑format perception shows that when respondents recall an ad, they tend to describe non‑intrusive and immersive experiences positively.
If Xbox and other companies aim to make gaming ads successful, these two attributes—non‑intrusiveness and immersion—will be crucial metrics to monitor. My forecast is that Xbox will not be the first nor the last platform to experiment with such a model. Advertising in games has existed for years, but often without the player’s best interests 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 gamers.