Virginie Chesnais serves as the chief marketing officer at Happydemics, a platform that specializes in ad‑tech analytics. For many years, gamers have viewed in‑game advertising with suspicion, and that wariness is understandable.
The reputation of ads in video games is mixed at best, often marred by annoyances such as redirects to unrelated websites or apps, misleading creative, and hard‑to‑find close buttons that leave players feeling trapped. A recent study from eMarketers highlighted that 52 % of respondents would abandon a game if they encountered several intrusive ad elements. Losing half of your audience at the moment you are trying to engage them is hardly a winning formula. However, the same research also revealed a more optimistic side: one in five gamers said they would play a title more often if the advertisements embedded within it were of high quality and relevance.
With Xbox currently piloting an ad‑supported game‑streaming service and the overall expense of gaming steadily climbing, there is a genuine opportunity for well‑crafted ads to find a welcoming niche in the industry. The argument for introducing a modest advertising component to games is stronger than many assume, especially when we look at the success of linear media platforms. Services such as Netflix, Disney+, and other on‑demand streaming giants have demonstrated that a mixed‑model approach—offering both ad‑free subscriptions and cheaper, ad‑supported tiers—can generate substantial revenue while expanding the audience base. Should Xbox’s experiment prove viable, it could not only preserve its paying subscriber pool but also unlock a fresh, previously untapped source of income at a moment when the brand is seeking additional financial streams.
This development matters because console gaming is increasingly being positioned as a premium experience. The price tags attached to new games, consoles, accessories, and downloadable content (DLC) are rising, making it more difficult for the average consumer to justify the spend.
As Xbox itself has noted, when executed correctly, advertising can lower the barrier to entry, allowing more people to enjoy games without having to make a large upfront payment. Mobile gaming has already shown how ad‑supported tiers can provide a gateway for players who might otherwise be excluded from the ecosystem. Crucially, the model remains optional.
Players who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads, while those who are more price‑sensitive can choose the ad‑supported route. By offering a two‑tier system, Xbox aims to keep its loyal fan base satisfied while simultaneously attracting newcomers who might be hesitant to invest heavily in a new console or game library. Although no formal survey data on this specific rollout exists yet, it is reasonable to assume that a large majority of gamers would tolerate a brief 30‑second commercial 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, consistently shows that advertisements placed within games outperform traditional TV, social, and online placements when it comes to recall and attribution. In other words, gamers are more likely to remember an ad they see while playing and correctly associate it with the brand behind it.
Xbox’s “around‑the‑game” strategy—showing ads before the gameplay begins rather than embedding them within the interactive environment—adds another layer of advantage. Our findings indicate that these pre‑game formats generate higher ad recall and stronger brand attribution compared with ads that appear directly inside the game world. This distinction matters because while we may notice a commercial while scrolling through a social feed or watching television, we don’t always link that impression to a specific brand.
Gaming, by contrast, seems to create a stronger mental connection, which explains why companies like Xbox and EA are increasingly exploring ad‑based monetisation. It is important to note that Xbox’s ads are not in‑game but pre‑game.
Traditional in‑game placements tend to excel further down the funnel, delivering better outcomes for brand image uplift, consideration, interest, and overall likability. A hybrid approach that combines both pre‑game and in‑game ads could theoretically offer advertisers the best of both worlds, though it also risks provoking greater pushback from players who value an uninterrupted experience. Xbox has pledged that any advertisements will be non‑intrusive. By positioning ads before the game loads, the company hopes to preserve the immersive nature of the gameplay itself.
This approach benefits both players—who won’t be jolted out of their experience—and advertisers, who want their messages to complement rather than disrupt the user journey. Relevance will be key. Nobody enjoys being served an ad for cat food when they don’t own a cat, or for a game they have already completed. By delivering contextual, targeted ads that make sense for the individual player, Xbox can minimise the chance that users abandon the session at the first sign of advertising, while simultaneously providing brands with a highly effective platform to reach new audiences.
Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how gamers will react to this new format; the second is whether the revenue generated will justify a long‑term commitment to the model.
The decision to explore ad‑supported game streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who appears willing to experiment with unconventional revenue streams. Only time will reveal whether this gamble pays off. Historically, many of our gaming‑ad initiatives have relied on a "watch an ad, earn an extra life" mechanic. Xbox’s proposition 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 particular exchange will be received. Nevertheless, broader research on ad‑format perception indicates that when participants are asked to describe the most appealing qualities of an advertisement, terms like "non‑intrusive" and "immersive" frequently surface as top descriptors. If Xbox and future adopters wish to make advertising a sustainable part of gaming, they will need to focus closely on these two metrics. My forecast is that Xbox will neither be the first nor the last platform to trial such a strategy.
Advertising in games is not a new concept, but it has rarely been implemented with the player’s experience as the primary concern. Should Xbox succeed in striking the right balance, it could pave the way for other gaming companies to follow suit, ultimately making video games more affordable and accessible for everyday players.