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 understandable.
The reputation of ads in video games is mixed: they often redirect users to unrelated websites or apps, sometimes feature misleading content, and can be plagued by hard‑to‑find close buttons, all of which generate frustration. A recent study by eMarketer highlighted that 52 % of players would abandon a game if they encountered several disruptive advertising elements. Losing half of your audience at the moment you’re trying to engage them is hardly a winning tactic. However, 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 play a title if the in‑game ads were of high quality and relevance. This context is especially relevant now that Xbox is piloting an ad‑supported game‑streaming service while the overall cost of gaming continues to climb.
High‑quality, well‑placed ads could find a receptive home within the gaming ecosystem. The argument for a hybrid ad‑for‑games model is stronger than many assume, and it has already been validated to some extent by linear media. Services such as Netflix, Disney+ and other streaming platforms have demonstrated that offering an ad‑supported tier can generate substantial revenue while keeping a broader audience engaged.
If Xbox’s experiment succeeds, it could not only preserve its subscriber base but also unlock a fresh, previously untapped revenue stream—something the brand could certainly use at this stage. The significance of this development lies in the fact that console gaming is increasingly being positioned as a premium product.
Prices for games, consoles, accessories and downloadable content keep rising, creating a financial hurdle for the average player. Xbox itself has acknowledged that, when executed correctly, advertising can help lower the barrier to entry for gamers. We have already observed this dynamic in mobile gaming, where ad‑supported tiers allow users to access games without paying large upfront fees. The key is that the ad option remains optional: players who prefer an uninterrupted experience can still choose a paid subscription.
By providing a two‑tier system, Xbox hopes to keep its loyal community while simultaneously making games more approachable for newcomers. 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 commercial if it meant they could enjoy an hour of their favorite title or try a new game.
Xbox likely has internal data that supports this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the UK and North America shows that in‑game advertising consistently outperforms television, social media and other online formats when it comes to ad recall and attribution. Players are more likely to remember an ad they saw while playing and to correctly associate it with the brand that displayed it. This is where Xbox’s “around‑the‑game” strategy—ads shown before the gameplay begins rather than embedded within the game world—becomes compelling.
Our data indicate that these pre‑game placements achieve higher recall and attribution rates compared with intrinsic in‑game spots. The distinction matters because, while we can recall ads seen on TV or scrolling through a feed, we do not always link those impressions to the brands behind them. Gaming appears to operate in its own league for this metric, which may explain why companies like Xbox and EA are increasingly exploring ad‑based models.
It is crucial to note that Xbox’s ads will not interrupt the actual gameplay; they will appear prior to the start of a session. In‑game ad formats tend to excel further down the marketing funnel, delivering stronger lifts in brand image, consideration, interest and likeability. A combined approach—leveraging both pre‑game and in‑game ads—could offer advertisers the best of both worlds, though it might also provoke greater pushback from players. Xbox has pledged that the advertisements will be non‑intrusive.
By placing ads before the game launches, the immersive experience remains untouched, which benefits both the gamer and the advertiser. Advertisers want their messages to feel like a natural part of the experience rather than a disruption. Relevance will be another critical factor.
No one wants to see an ad for cat food when they don’t 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 prevent frustration and keep users engaged, while providing brands with an effective platform to reach new audiences. Nonetheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to pre‑game advertising; 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 ideas.
Only time will reveal whether this strategy delivers the intended results. Historically, many gaming ad campaigns have relied on a "watch an ad, earn an extra life" model.
Xbox’s proposal is different: it asks players to watch an advertisement to access a game they already own. Our existing data set does not yet indicate how this will be received. However, research on ad‑format perception—where respondents who recall an ad are asked to select positive descriptors—has consistently highlighted "non‑intrusive" and "immersive" as top‑rated attributes. If Xbox and future industry players aim to make gaming ads successful, these two qualities will be essential to monitor.
My forecast is that Xbox will neither be the first nor the last company to trial such a strategy. Advertising has been part of gaming for years, but it has not always been designed with the player experience at its core.
Should Xbox manage to strike the right balance, it could pave the way for other game publishers to follow, ultimately making video games more affordable and accessible for the everyday gamer.