Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have approached in‑game advertising with suspicion, and the wariness is understandable. The reputation of ads in video games is mixed at best, often plagued by annoying redirects to unrelated sites or apps, misleading content, and close buttons that are difficult to locate.
Such experiences have left a sour taste in the mouths of many players. A recent study conducted by eMarketer highlighted that 52 % of gamers would abandon a session if they encountered several disruptive ad elements. Losing half of an audience at the moment you’re trying to engage them is hardly an effective strategy.
However, advertisements do not have to be detrimental. The same research revealed that one in five gamers would actually increase the frequency with which they play a title if the in‑game ads were of a high quality and felt appropriate. In other words, well‑crafted ads can enhance, rather than detract from, the gaming experience.
Xbox is currently piloting an ad‑supported game‑streaming service at a time when the overall cost of playing is on a steady upward trajectory. This creates a fertile environment for premium‑grade advertising to find a welcoming home within the gaming ecosystem. The argument for a hybrid "ads‑for‑games" model is more compelling than many anticipate, and it has already been demonstrated to some extent by linear media platforms. Services such as Netflix, Disney+, and other streaming giants have proven that a steady revenue stream can be generated by offering both ad‑free and ad‑supported subscription tiers.
Should Xbox’s experiment succeed, it would not only preserve its paying subscriber base but also unlock a brand‑new, previously untapped source of income—something the company could certainly use right now. This development matters because console gaming is increasingly being positioned as a premium offering. The price tags attached to new consoles, individual games, accessories, and downloadable content are climbing, making it harder for the average consumer to justify the expense. These rising costs act as a barrier that keeps many potential players on the sidelines.
Xbox itself has stated that, when executed correctly, advertising can lower the barrier to entry for gamers. The mobile‑gaming sector already provides a clear example: ad‑supported tiers have opened a pathway for players who are unwilling or unable to make large upfront purchases, allowing them to enjoy games for free or at a reduced cost in exchange for watching ads.
It is also crucial to note that any ad‑based model would be entirely optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads altogether.
By presenting a two‑tier system—ad‑free and ad‑supported—Xbox hopes to keep its loyal fan base while simultaneously making its library more accessible to newcomers. Although there is currently no public survey data specific to Xbox’s new approach, it is reasonable to assume that a large majority of gamers would tolerate a short, 30‑second advertisement if it granted them an hour of gameplay on a beloved or newly released title.
Xbox’s internal research likely supports this hypothesis. Data from Happydemics covering 285 in‑game campaigns across the United Kingdom and North America indicates that in‑game advertisements consistently outperform traditional TV, social, and online ads when it comes to recall and attribution.
In other words, players are more likely to remember an ad they saw while gaming and correctly associate it with the brand that displayed it. This is where Xbox’s "around‑the‑game" strategy—showing ads before the game starts rather than embedding them within the gameplay—becomes especially interesting. Our research shows that these pre‑game placements generate higher recall and attribution scores compared with ads that appear directly inside the game world.
The distinction matters because, while we may recall an advertisement seen on television or scrolling through a social feed, that memory does not always translate into a clear brand association. Gaming appears to be 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 important to clarify that Xbox’s ads will be pre‑game rather than in‑game. Traditional in‑game formats tend to excel further down the marketing funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability.
Combining both pre‑game and in‑game formats could theoretically offer advertisers the best of both worlds, but it would also raise the risk of player pushback. Xbox has pledged that any advertisements will be non‑intrusive. By placing ads before the gaming session begins, the company aims to preserve the immersive experience that players value. This approach benefits both the gamer—who enjoys an uninterrupted play session—and the advertiser, who wants their message to be part of a positive experience rather than a disruptive interruption.
Relevance will be key. No gamer wants to see an ad for cat food when they have no cats, or a promotion for a game they have already completed. By ensuring that ads are contextually appropriate and provide a clear rationale for being shown, Xbox can keep players from abandoning the session while giving brands an effective platform to reach new audiences.
Nonetheless, Xbox is venturing into largely uncharted territory. The first unknown is how players will react to the presence of ads; the second is whether the advertising revenue will be sufficient to justify making the model a permanent feature. The move toward an ad‑supported streaming service reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with new business models. Whether this gamble pays off remains to be seen.
Historically, many gaming ad campaigns have relied on a "watch an ad, earn an extra life" mechanic. Xbox’s proposal is different: players would watch an ad to gain access to a game they already own.
Our current data set does not yet reveal how this particular exchange will be perceived. However, broader research on ad‑format perception shows that when participants are asked to describe the format using positive adjectives, "non‑intrusive" and "immersive" consistently rank among the top descriptors. If Xbox—and potentially other platforms in the future—aim to make advertising a staple of the gaming experience, these two qualities will be essential metrics to monitor. My forecast is that Xbox will neither be the first nor the last company to experiment with this approach.
Advertising has been part of gaming for many years, but rarely with the player’s experience at the forefront. Should Xbox manage to strike the right balance, it could pave the way for similar initiatives across the industry and, more importantly, make video games considerably more affordable for everyday gamers.