Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an ad‑tech analytics firm. For years, many gamers have viewed in‑game advertising with suspicion, and their concerns are not unfounded. Common complaints include redirects to unrelated sites, misleading content, and the frustration of trying to locate a close button that seems deliberately hidden.
A recent eMarketers survey highlighted that 52 % of respondents would abandon a game after encountering multiple intrusive ad elements, indicating that losing half of an audience at the moment you’re trying to engage them is a poor tactic. However, advertising does not have to be a negative experience. The same study revealed that one in five gamers would actually increase the frequency with which they play a title if the in‑game ads were high‑quality and well‑executed.
This suggests a market for tasteful, relevant advertising that adds value rather than detracting from the experience. Xbox is currently experimenting with an ad‑supported game‑streaming service at a time when the overall cost of gaming continues to climb. If the platform can deliver premium‑grade ads, it could find a receptive audience. The logic mirrors the success of linear media platforms such as Netflix and Disney+, which have introduced ad‑supported tiers alongside their premium subscriptions.
By adding a similar tier, Xbox could not only preserve its existing paying subscriber base but also tap into a fresh revenue stream that is especially valuable given the brand’s recent financial pressures. The relevance of this approach becomes clearer when we consider how console gaming is evolving into a premium offering. Prices for consoles, games, accessories, and downloadable content have risen steadily, making it harder for the average consumer to justify the expense.
This price inflation creates a barrier that excludes many potential players. Xbox itself has argued that, when executed correctly, advertising can lower the cost of entry for gamers.
Mobile gaming already demonstrates that an ad‑supported model can give players a way to enjoy games without a large upfront payment. By offering a free or lower‑cost tier that includes ads, Xbox can attract newcomers who might otherwise be deterred by the high price tag of a full subscription. Importantly, the model remains optional.
Players who prefer an uninterrupted experience can continue to pay for an ad‑free subscription. This two‑tier system aims to keep loyal fans happy while simultaneously expanding accessibility for a broader audience. 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 gaining an hour of gameplay on a favorite or new title.
Happydemics’ data, drawn from 285 in‑game campaigns across the UK and North America, consistently shows that in‑game ads outperform television, social, and other online formats in terms of recall and attribution. Players are more likely to remember an ad they see while immersed in a game and correctly associate it with the brand that displayed it. Xbox’s “around‑the‑game” strategy—showing ads before the game starts rather than during gameplay—adds another layer of intrigue. Our research indicates that pre‑game placements achieve higher recall and attribution scores compared with ads embedded directly within the game world.
This distinction matters because, while people may notice ads on TV or social feeds, they do not always link those impressions to a specific brand. Gaming appears to create a stronger mental connection, which likely explains why companies like EA and now Xbox are exploring ad‑based monetisation.
It is crucial to note that Xbox’s ads are not in‑game; they appear pre‑game. Traditional in‑game formats tend to excel later in the marketing funnel, driving brand‑image uplift, consideration, interest, and likeability. A hybrid approach—combining pre‑game and in‑game ads—could theoretically give advertisers the best of both worlds, though it also risks greater pushback from players who value uninterrupted immersion. Xbox has pledged that the ads will be non‑intrusive.
By placing them before the gameplay begins, they avoid breaking the player’s focus once the experience is underway. This design benefits both gamers, who retain a seamless experience, and advertisers, who want their messages to be part of the entertainment rather than a disruption. Relevance will be key.
No one wants to see an advertisement for cat food when they don’t own a cat, or for a game they have already completed. Contextual, targeted ads that make sense to the individual player will help prevent churn and increase the effectiveness of the campaigns.
Nevertheless, Xbox is navigating uncharted waters. The first unknown is how gamers will react to this new ad format; the second is whether the revenue generated will justify making the model a permanent fixture.
Xbox CEO Asha Sharma’s willingness to experiment with ad‑supported streaming shows a willingness to take calculated risks, but only time will reveal whether the strategy pays off. Historically, many gaming ad models have relied on “watch an ad, earn an extra life” mechanics. Xbox’s proposal is different: users would watch an ad to access a game they already own, a scenario that our existing data set does not directly address. However, broader research on ad format perception shows that descriptors like “non‑intrusive” and “immersive” are among the most positively received.
If Xbox can deliver on those qualities, it will likely meet the expectations of both players and advertisers. My forecast is that Xbox will not be the first nor the last platform to trial this approach. 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 publishers to adopt similar models, ultimately making video games more affordable and accessible for the everyday gamer.