Virginie Chesnais serves as Chief Marketing Officer at the ad‑technology analytics firm Happydemics. For many years, gamers have viewed in‑game advertising with suspicion, and that wariness is not unfounded. The reputation of ads in video games is mixed at best, with frequent complaints about redirects to unrelated sites or apps, misleading content, and the inability to locate a close button easily. A recent study by eMarketer revealed that 52 % of players would abandon a session if they encountered several intrusive ad elements.
Losing half of an audience at the moment you are trying to engage them is hardly a winning formula. Nevertheless, advertising does not have to be a negative experience.
The same survey indicated that one in five gamers would actually increase the frequency with which they play a title if the in‑game advertisements were of high quality and relevance. This suggests a potential sweet spot where ads add value rather than detract from enjoyment. Xbox is currently piloting an ad‑supported game‑streaming service at a time when the overall cost of playing is climbing steadily.
In this environment, well‑crafted advertisements could find a receptive home within the gaming ecosystem. The argument for a hybrid "ads‑for‑games" model is more compelling than many assume, and it has already been demonstrated in the world of linear media. Services such as Netflix, Disney+, and other streaming platforms have proven that offering an ad‑supported tier can generate significant revenue while still delivering a consistent product.
Should Xbox’s experiment succeed, it could not only preserve its subscription base but also unlock a brand‑new revenue stream—something the company could certainly use given its recent financial pressures. The relevance of this development is heightened by the fact that console gaming is increasingly positioning itself as a premium service. Prices for games, consoles, accessories, and downloadable content continue to rise, creating a financial barrier for the average player. Xbox itself has acknowledged that, when executed correctly, advertising can reduce the cost of entry to gaming.
Mobile gaming already shows that ad‑supported options can provide a gateway for users who are unwilling or unable to make large upfront purchases. Importantly, any advertising model Xbox introduces will be optional. Players who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads. By offering a two‑tier system, Xbox aims to keep its dedicated fan base happy while simultaneously opening the door for newcomers who might be deterred by high upfront costs.
Although we lack concrete survey data on this particular rollout, it is reasonable to bet that a large majority of gamers would tolerate a 30‑second commercial if it granted them an hour of playtime on a beloved or new title. Xbox’s internal data likely supports this intuition. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America demonstrates that in‑game ads consistently outperform television, social media, and other online formats when it comes to recall and attribution. Players are more likely to remember an advertisement that appears within a game and correctly associate it with the sponsoring brand.
Xbox’s "around‑the‑game" approach—showing ads before the game begins rather than embedding them within the gameplay—adds another layer to this picture. Our research indicates that pre‑game placements achieve higher recall and attribution scores compared with ads that appear directly inside the game environment. This distinction matters because, while we may notice ads on TV or in our social feeds, we do not always link those impressions to specific brands. Gaming appears to operate in a different league for these metrics, which may explain why companies like Xbox and EA are increasingly exploring ad‑based models.
It is crucial to note that Xbox’s ads are not in‑game; they are pre‑game. Traditional in‑game formats tend to excel further down the marketing funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability. A combined strategy that leverages both pre‑game and in‑game placements could provide advertisers with a powerful toolkit, but it also risks provoking greater pushback from players who are sensitive to interruptions. Xbox has promised that any advertisements will be non‑intrusive.
By placing ads before the gameplay starts, the company aims to preserve the immersive experience that gamers value. This approach benefits both the player—who enjoys an uninterrupted session—and the advertiser, who wants their message to be part of the experience rather than a disruption. Relevance will be key. No gamer wants to see an ad for cat food when they do not own a cat, or a promotion for a game they have already completed.
Contextual, targeted ads that make sense for the individual player will help ensure that advertisements are tolerated rather than rejected, while also providing brands with an effective channel to reach new audiences. Xbox is venturing into largely uncharted territory. The first unknown is how players will react to a pre‑game ad model; the second is whether the revenue generated will be sufficient to sustain the approach over the long term.
The move to explore ad‑supported game streaming reflects a willingness by Xbox CEO Asha Sharma to experiment and take calculated risks. Whether the strategy will pay off remains to be seen.
Historically, many of our gaming‑ad projects have revolved around "watch an ad, earn an extra life" mechanics. Xbox’s proposal is different: players would watch an ad to gain access to a game they already own.
Our existing data set does not yet reveal how this particular exchange will be perceived. Nevertheless, broader research on ad‑format perception shows that descriptors such as "non‑intrusive" and "immersive" consistently rank among the most positive. If Xbox—and potentially other platforms—are to make advertising a lasting component of gaming, they will need to prioritize these qualities.
My forecast is that Xbox will neither be the first nor the last major console to trial this model. Advertising in games has existed for years, but it has rarely been designed with the player’s experience at its core. Should Xbox manage to strike the right balance, it could pave the way for other companies to follow, ultimately making video games more affordable and accessible for everyday gamers.