Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform focused on advertising technology. For years, many gamers have approached in‑game advertising with suspicion, and their concerns are understandable. The reputation of ads in video games is mixed, often marred by redirects to unrelated websites or apps, misleading messaging, and hard‑to‑find close buttons that frustrate users. A recent study by eMarketer revealed that 52 % of players would abandon a title after encountering several disruptive ad elements.
Losing half of an audience at the moment you’re trying to engage them is hardly an effective tactic. 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 game if the ads presented were of high quality and relevance. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, well‑crafted advertisements could find a natural home in the medium.
The argument for a modest "ads‑for‑games" model is stronger than many assume, as linear media has already demonstrated. 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 reliable service.
Should Xbox’s experiment succeed, it would not only preserve its paying subscriber base but also unlock a fresh, previously untapped income stream—something the brand could certainly use at this juncture. This is particularly relevant because console gaming is increasingly being positioned as a premium experience. The price tags attached to games, consoles, accessories, and downloadable content are soaring, making it harder for the average consumer to justify the expense and creating a barrier to entry for casual players.
Xbox itself has stated that, when executed correctly, advertising can lower the cost of accessing games. Mobile gaming already offers a precedent: ad‑supported tiers allow players to try a game without paying a large upfront fee, thereby expanding the overall player pool. Crucially, the approach remains optional. Those who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads.
By offering a two‑tier system, Xbox hopes to keep its loyal community while simultaneously opening the door for newcomers who might otherwise be priced out. Although we lack concrete survey data on this specific announcement, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second commercial if it meant gaining an hour of playtime on a favorite or newly released title. Xbox likely has internal research supporting that assumption.
Happydemics data drawn from 285 in‑game campaigns across the United Kingdom and North America show that in‑game advertising consistently outperforms TV, social, and other online formats when it comes to recall and attribution. Players are more likely to remember an ad they saw while gaming and correctly associate it with the brand that delivered it.
This is where Xbox’s “around‑the‑game” strategy—ads that appear before the gameplay begins rather than within the game world—becomes intriguing. Our data indicate that pre‑game placements generate stronger recall and attribution scores compared with intrinsic in‑game placements.
The distinction matters because, while we can often recall advertisements seen on television or scrolling through social feeds, we do not always link those impressions to a specific brand. Gaming appears to occupy a unique space in this regard, which may explain why companies like Xbox and EA are increasingly exploring ad‑based models. It is also important to note that Xbox’s ads are not embedded within the game itself; they are shown beforehand. Traditional in‑game ad formats tend to excel further down the funnel, delivering higher lifts in brand image, consideration, interest, and overall likability.
A hybrid approach—combining 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 its ads will be non‑intrusive.
By placing commercials before the game starts, the experience remains uninterrupted once play begins, preserving immersion for the gamer. This consideration benefits both the audience—who avoids mid‑session interruptions—and advertisers, who want their messages to complement rather than clash with the gaming experience. Relevance will be key. No player wants to see an advertisement for cat food when they don’t own a cat, or for a game they have already completed.
Contextual, well‑targeted ads will keep users from abandoning the session while giving brands a high‑quality platform to reach new eyes. Nevertheless, Xbox is venturing into largely uncharted territory. First, it must gauge how players will react to pre‑game advertising; second, it must determine whether the revenue generated will justify making the model a permanent fixture. 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.
Only time will reveal whether the strategy pays off. Historically, many gaming ad campaigns have relied on a "watch an ad, earn an extra life" model. Xbox’s proposal, however, asks players to view an ad to access a game they already own, a scenario that our existing data set does not directly address.
Related research on ad‑format perception shows that when participants recall an ad, they often describe the experience as "non‑intrusive" and "immersive"—the two most popular positive descriptors. If Xbox and future adopters aim to make gaming ads successful, these two attributes will be critical metrics to monitor. My forecast is that Xbox will neither be the first nor the last to trial such a model.
Advertising has existed in gaming for a long time, but rarely with the player’s experience at the forefront. Should Xbox perfect the balance, it could pave the way for other publishers to follow suit, ultimately making video games more affordable and accessible for everyday gamers.