Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform that specializes in advertising technology. For many years, the gaming community has looked at in‑game advertising with suspicion, and that wariness is understandable. The reputation of ads in video games is mixed at best; players often encounter redirects to unrelated websites or apps, misleading creative, or dismiss buttons that are hidden or difficult to locate, all of which breed frustration. A recent study conducted by eMarketer highlighted the severity of the problem: more than half—52%—of respondents said they would stop playing a title if they ran into several disruptive ad elements.
Losing half of an audience at the moment you are trying to engage them is hardly a winning formula. Nevertheless, advertising does not have to be synonymous with annoyance. The same research revealed a more optimistic finding: one in five gamers indicated they would actually increase the frequency with which they play a game if the ads were well‑crafted and unobtrusive.
In other words, quality matters more than quantity. Xbox is currently piloting a new ad‑supported game‑streaming service, and the broader context of rising gaming expenses makes the prospect of high‑quality advertising especially appealing.
The logic behind introducing an "ads‑for‑games" model mirrors what has already proven successful in linear media. Services such as Netflix, Disney+, and other on‑demand platforms have demonstrated that a mixed revenue model—combining subscription fees with an ad‑supported tier—can generate substantial income while expanding the audience base. Should Xbox’s experiment succeed, the company would not only preserve its existing subscriber pool but also unlock a fresh, previously untapped revenue stream at a time when additional cash flow is sorely needed. The relevance of this shift is amplified by the fact that console gaming is increasingly positioned as a premium offering.
The price tags on new consoles, flagship titles, accessories, and downloadable content (DLC) have all been climbing steadily, creating a financial barrier for the average consumer. Xbox itself has acknowledged that, when executed correctly, advertising can help lower the cost of entry for gamers.
The mobile gaming sector already provides a clear precedent: ad‑supported tiers allow players to enjoy games without paying large upfront fees, thereby widening the market. Importantly, any ad‑based model Xbox proposes would be entirely optional.
Players who prefer an uninterrupted experience could simply maintain a paid subscription, while those who are comfortable with occasional commercials could opt for the free tier. This two‑tier approach is designed to keep the loyal fan base happy while simultaneously making games more accessible to newcomers. Although no formal survey data exists yet on Xbox’s specific plan, 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 brand‑new title.
Xbox’s internal analytics are likely to confirm this hypothesis, given the company’s deep data resources. Data from Happydemics, covering 285 in‑game campaigns across the United Kingdom and North America, consistently shows that in‑game advertising outperforms traditional TV, social media, and online display ads in terms of recall and attribution.
Players tend to remember and correctly associate the brands they see within a game environment far better than those they encounter elsewhere. This advantage becomes even more pronounced when ads are placed "around the game"—for example, as pre‑game interstitials—rather than embedded directly within the gameplay itself. Our research indicates that these around‑the‑game formats generate superior recall and attribution scores compared with intrinsic in‑game placements. Why does this matter?
While we can often recall an ad that flashed on a television screen or a sponsored post while scrolling through a feed, that recall does not always translate into brand association. Gaming, by contrast, appears to occupy a unique niche where the ad experience and brand memory are tightly linked. This is likely one of the reasons why companies like Xbox and Electronic Arts (EA) are increasingly exploring ad‑based gaming solutions.
It is crucial to note that Xbox’s initial rollout focuses on pre‑game ads rather than intrusive in‑game banners. In‑game formats do have strengths further down the marketing funnel, such as boosting brand image, consideration, interest, and overall likability.
A hybrid approach—combining pre‑game and in‑game placements—could theoretically deliver the best of both worlds for advertisers, but it also raises the risk of heightened player pushback. Xbox has pledged that its ads will be non‑intrusive.
By positioning commercials before the game starts, the company aims to preserve the immersive experience once gameplay begins. This strategy benefits both players, who enjoy an uninterrupted session, and advertisers, who want their messages to be part of the experience rather than a disruption. Relevance is another key factor.
No gamer wants to see an advertisement for cat food if they don’t own a cat, or a promotion for a game they have already completed. Contextual, well‑targeted ads that align with a player’s interests will be essential for keeping the audience engaged and preventing them from abandoning the session at the sight of an irrelevant commercial.
Xbox is navigating uncharted waters on two fronts: first, gauging how players will react to a new ad model, and second, determining whether the revenue generated will be sufficient to sustain the approach over the long term. The move toward ad‑supported game streaming is a bold, calculated risk taken by Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with innovative business models.
Only time will reveal whether this gamble pays off. Historically, many of our gaming‑ad projects have revolved around a "watch an ad, earn an extra life" premise. Xbox’s proposal is different: it asks players to watch an ad in order to access a game they already own.
Our current data set does not contain a direct analogue for this scenario, leaving an open question about its effectiveness. Nonetheless, broader research on ad‑format perception shows that when respondents recall an ad, they frequently describe it as "non‑intrusive" and "immersive"—the two most popular positive descriptors.
If Xbox, and potentially other platforms in the future, aim to make gaming ads a success, these two metrics—non‑intrusiveness and immersion—will be critical performance indicators. Looking ahead, I anticipate that Xbox will neither be the first nor the last company to experiment with this model. Advertising in video games is not a novel concept; it has existed for decades, but it has rarely been designed with the player’s experience at the forefront.
Should Xbox manage to strike the right balance, it could pave the way for a new generation of ad‑supported gaming services, ultimately lowering the cost barrier and making video games more reachable for the everyday consumer.