Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform that specializes in advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and their concerns are understandable. The reputation of ads in video games is often tarnished by issues such as redirects to unrelated websites or apps, misleading content, and hard‑to‑find close buttons that frustrate players.
A recent study conducted by eMarketer revealed that 52 % of respondents would abandon a game if they encountered multiple intrusive advertising elements. Losing half of an audience at the very moment you are trying to engage them is clearly not an effective approach. However, advertising does not have to be a negative experience.
The same research indicated that one in five gamers would actually increase the amount of time they spend with a title if the in‑game advertisements were of high quality and relevance. This suggests that, when executed correctly, ads can enhance rather than detract from the gaming experience. Xbox is currently experimenting with an ad‑supported game‑streaming service at a time when the overall cost of playing is on a steady upward trajectory. High‑quality, well‑targeted ads could therefore find a natural home within the gaming ecosystem.
The argument for introducing an advertising‑based revenue model in gaming is more compelling than many critics acknowledge, and it has already been demonstrated in the world of linear media. Services such as Netflix, Disney+, and other streaming platforms have shown that offering both ad‑free and ad‑supported tiers can generate substantial income while still delivering a consistent product. Should Xbox’s experiment prove successful, the company would not only preserve its subscription‑based revenue stream but also unlock an entirely new source of income—a crucial development given the brand’s current financial pressures. This development matters because console gaming is increasingly positioning itself as a premium offering.
Prices for games, consoles, accessories, and downloadable content continue to climb, creating a financial barrier for the average consumer. Xbox itself has stated that, when executed responsibly, advertising can lower the cost of entry for gamers. The mobile gaming sector provides a useful precedent: ad‑supported tiers have allowed players to engage with games without paying large upfront fees, effectively broadening the market.
Importantly, participation in these tiers is entirely optional. Players who prefer an uninterrupted experience can continue to pay a subscription fee, while those who are comfortable with occasional ads gain a lower‑cost pathway into the ecosystem. By offering a two‑tier system, Xbox aims to retain its core fan base while simultaneously making games more accessible to newcomers.
Although there is no specific survey data on Xbox’s new approach yet, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it granted them an hour of gameplay in a beloved or newly released title. Happydemics’ data, derived from 285 in‑game campaigns across the United Kingdom and North America, consistently shows that in‑game ads outperform television, social, and other online formats in terms of recall and accurate brand attribution.
Xbox’s “around‑the‑game” strategy—showing ads before a session begins rather than embedding them within the gameplay itself—adds another layer of interest. Our research indicates that pre‑game placements generate stronger recall and attribution metrics compared with ads that appear directly inside the game world. This distinction matters because, while we can often remember ads encountered while watching TV or scrolling social feeds, those memories do not always translate into a clear association with the sponsoring brand. Gaming, by contrast, appears to create a tighter link between the ad and the brand, which may explain why companies like EA and Xbox are increasingly exploring ad‑based models.
It is crucial to note that Xbox’s advertisements will be pre‑game, not in‑game. In‑game ad formats tend to excel further down the conversion funnel, delivering higher lifts in brand image, consideration, interest, and likeability. A hybrid approach—combining both pre‑game and in‑game ads—could theoretically offer advertisers the best of both worlds, though it also runs the risk of provoking greater pushback from players who are sensitive to interruptions.
Xbox has pledged that any ads shown will be non‑intrusive. By placing ads before the game starts, the company hopes to preserve the immersive experience that gamers value. This approach benefits both players, who avoid interruptions during gameplay, and advertisers, who want their messages to be part of the experience rather than a disruptive nuisance.
Relevance will be another key factor. No gamer 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 for the individual player will be essential to keep users from abandoning the session at the sight of an irrelevant commercial. Xbox is venturing into uncharted territory on two fronts: first, how gamers will react to pre‑game advertising, and second, whether the revenue generated will justify making the model a permanent feature.
The decision to explore ad‑supported streaming reflects a willingness by Xbox CEO Asha Sharma to experiment and take calculated risks. Only time will reveal whether this strategy pays off. Historically, many of our gaming‑ad projects have relied on the classic “watch an ad, earn an extra life” model. Xbox’s proposal is different—it asks players to watch an ad in order to access a game they already own.
Our existing data set does not yet provide a clear picture of how this will be received. Nevertheless, broader research on ad‑format perception shows that descriptors such as “non‑intrusive” and “immersive” are among the most positively received.
If Xbox—and potentially other platforms in the future—can deliver advertising that meets these criteria, they will likely succeed in both player satisfaction and advertiser effectiveness. My forecast is that Xbox will neither be the first nor the last company to test this approach. Advertising in games has existed for many 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 open the door for other game publishers to adopt similar models, ultimately making video games more affordable and accessible for everyday gamers.