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 there are good reasons for that wariness. The reputation of ads in interactive entertainment is mixed; players often encounter redirects to unrelated websites or apps, misleading creative, and close buttons that are difficult to locate, all of which generate frustration. A recent study conducted by eMarketer revealed that 52 % of gamers would abandon a session if they ran into several disruptive ad elements.
Losing half of your audience at the moment you are trying to engage them is hardly an effective tactic. However, advertising does not have to be a negative experience. The same research indicated that one in five players would actually increase the frequency with which they play a title if the in‑game advertisements 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 ads could find a natural home in the console ecosystem.
The argument for a "ads‑for‑games" model is more compelling than many assume, especially when we look at the success of linear media. Platforms such as Netflix, Disney+, and other streaming services have demonstrated that a hybrid approach—offering both ad‑free and ad‑supported tiers—can generate substantial revenue while keeping a broad audience engaged.
Should Xbox’s experiment prove viable, it would not only preserve its paying subscriber base but also unlock a fresh, previously untapped income stream at a moment when the brand could benefit from additional cash flow. This development matters because console gaming is increasingly being positioned as a premium service.
The price tags attached to new releases, hardware, accessories, and downloadable content are rising steadily, making it harder for the average consumer to justify the expense. In effect, cost is becoming a barrier that keeps many potential players on the sidelines. Xbox itself has stated that, when executed correctly, advertising can help lower the entry cost for gamers. Mobile gaming already offers a clear precedent: ad‑supported tiers allow users to experience a game without paying a large upfront fee, simply by watching short commercials.
This model expands the market by inviting players who might otherwise be deterred by price. Crucially, participation would be optional.
Those who prefer an uninterrupted experience could continue to pay a subscription fee, while others could opt into the ad‑supported version. By providing a two‑tier system, Xbox aims to retain its loyal fan base while simultaneously making its ecosystem more approachable for newcomers.
Although there is no specific survey data on Xbox’s latest announcement, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second ad if it meant gaining access to a beloved or newly released title for an hour of playtime. Xbox’s internal data likely supports this hypothesis. Happydemics analyzed 285 in‑game campaigns across the United Kingdom and North America and found that in‑game advertisements consistently outperformed TV, social, and online placements in terms of recall and attribution.
Players were more likely to remember the brand and correctly associate the ad with its source when the ad appeared within the gaming environment. This is where Xbox’s "around‑the‑game" strategy—ads displayed before the game launches rather than embedded within the gameplay—becomes intriguing.
Our research shows that pre‑game formats achieve a clear advantage in recall and attribution compared with intrinsic in‑game placements. The distinction matters because, while we can often recall ads seen on television or scrolling through social feeds, that memory does not always translate into brand association. Gaming appears to sit in a league of its own for this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based revenue models.
It is also important to note that Xbox’s ads are pre‑game, not in‑game. Traditional in‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likability.
A blended 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 who value an uninterrupted experience. Xbox has pledged that the advertisements will not be intrusive.
By placing ads before the gameplay begins, the company aims to preserve the immersive nature of the experience. This approach benefits both players, who avoid interruptions during play, and advertisers, who want their messages to complement rather than disrupt the session. Relevance will be key.
No gamer wants to see a commercial for cat food when they don’t own a cat, or an advertisement for a game they have already completed. Contextual, well‑targeted ads can keep players engaged and prevent them from abandoning the session at the first sign of irrelevant content, while giving brands a premium platform to reach new audiences. Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how gamers will react to the presence of ads, and the second is whether the revenue generated will justify a long‑term commitment to the model.
The decision to explore ad‑supported streaming reflects the boldness of Xbox CEO Asha Sharma, who has demonstrated a willingness to take calculated risks. Time will reveal whether this strategy pays off. Historically, many of our gaming‑ad projects have revolved around "watch an ad, earn an extra life" mechanics. Xbox’s proposal, however, asks players to watch an ad simply to access a game they already own.
Our existing data set does not yet indicate how this will be received. Nevertheless, broader research on ad‑format perception shows that when respondents recall an ad, they often describe the format as "non‑intrusive" and "immersive"—the two most popular positive descriptors.
If Xbox and future adopters want to make advertising a sustainable part of gaming, they will need to focus closely on these two attributes. My forecast is that Xbox will neither be the first nor the last platform to test such a model. Advertising in games has existed for years, but it has rarely been designed with the player’s experience as the primary concern. Should Xbox succeed in striking the right balance, it could pave the way for other publishers to follow, ultimately making video games more affordable and accessible for everyday gamers.