Virginie Chesnais serves as chief marketing officer at the ad‑tech analytics firm Happydemics. For years, many gamers have viewed in‑game advertising with suspicion, and their concerns are not unfounded. The reputation of ads in video games is mixed: frequent redirects to external sites, misleading content, and hard‑to‑find close buttons are common sources of irritation. A recent eMarketers survey highlighted that 52 % of respondents would stop playing 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 a nuisance. The same study revealed that one in five gamers would actually increase the frequency with which they played a title if the in‑game ads were high‑quality and well‑integrated. This suggests that, when executed correctly, ads can enhance rather than detract from the gaming experience.
Enter Xbox’s experimental ad‑supported game‑streaming service, launched at a time when the overall cost of playing is climbing steadily. High‑caliber ads could find a natural home in this environment. The logic mirrors what has already been proven in linear media: platforms such as Netflix, Disney+, and other streaming services have generated substantial revenue by offering both ad‑free and ad‑supported tiers. If Xbox’s model succeeds, it could preserve its subscription base while unlocking a previously untapped revenue stream—something the brand urgently needs.
The relevance of this approach is underscored by the fact that console gaming is increasingly becoming a premium offering. Prices for games, consoles, accessories, and downloadable content continue to rise, creating a financial barrier for the average player. Xbox itself has acknowledged that, when handled properly, advertising can lower the cost of entry for gamers.
Mobile gaming has already demonstrated that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases. Crucially, the system would be optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are comfortable with occasional commercials could enjoy a reduced cost of access. By providing a two‑tier structure, Xbox aims to keep its loyal fan base happy while simultaneously attracting new users who might otherwise be priced out.
Although there is no specific survey data on this particular initiative yet, it is reasonable to assume that most gamers would tolerate a short, 30‑second ad if it meant they could play a beloved title or try a new game for an hour without paying the full price. Xbox likely has internal data supporting this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the UK and North America shows that in‑game advertising consistently outperforms TV, social, and other online formats in terms of ad recall and attribution. Players are more likely to remember an ad they saw while gaming and correctly associate it with the brand that displayed it. Xbox’s “around‑the‑game” strategy—placing ads before the game starts rather than embedding them within the gameplay—adds another layer of advantage. Our data indicate that pre‑game placements generate higher recall and attribution scores compared with intrinsic in‑game spots.
This distinction matters because, while we often remember ads seen on television or scrolling through social feeds, those memories do not always translate into clear brand connections. Gaming appears to operate in its own league for this metric, which explains why companies like Xbox and EA are increasingly exploring ad‑based models. It is important to note that Xbox’s ads are pre‑game, not in‑game. Traditional in‑game formats tend to excel later in the marketing funnel, boosting brand image, consideration, interest, and likeability.
Combining both pre‑game and in‑game ads could, in theory, give advertisers the best of both worlds, but it also risks provoking greater pushback from players who value an uninterrupted experience. Xbox has promised that the ads will be non‑intrusive, meaning they will appear before the gameplay begins and will not break immersion.
This approach benefits both the player—who can enjoy an ad‑free session once the game launches—and the advertiser, who wants their message to be part of the experience rather than a disruptive interruption. Relevance will be key. No gamer wants to see a promotion for cat food when they don’t own a cat, or an advertisement for a game they have already completed.
By delivering contextual, well‑targeted ads, Xbox can keep players from abandoning a session while giving brands a highly engaged audience. Nevertheless, Xbox is navigating uncharted territory. The first unknown is how players will react to ads placed around their gaming sessions; the second is whether the revenue generated will be sufficient to sustain the model over the long term.
The move toward ad‑supported streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, but only time will reveal whether the strategy pays off. Historically, many gaming ad campaigns have relied on “watch an ad, get an extra life” mechanics. Xbox’s proposal is different: it asks players to watch an ad to access a game they already own. Our existing data set does not yet show how this will be received.
However, broader research on ad format perception indicates that descriptors such as “non‑intrusive” and “immersive” are among the most positively received. If Xbox—and potentially other platforms—aim to make gaming ads a lasting feature, these two attributes will be critical to monitor.
My forecast is that Xbox will neither be the first nor the last to experiment with this approach. Advertising in video games has existed for years, but it has rarely been designed with the player’s experience as the primary focus.
Should Xbox succeed in striking the right balance, it could pave the way for other publishers to adopt similar models, ultimately making video games more affordable and accessible for everyday gamers.