Virginie Chesnais serves as Chief Marketing Officer at Happydemics, a platform that specializes in ad‑tech analytics. For many years, gamers have looked at in‑game advertising with suspicion, and their wariness is understandable.
The reputation of ads in video games is mixed at best, often marred by redirects to unrelated sites or apps, misleading content, and obscure or missing close buttons that frustrate users. A recent study conducted by eMarketer highlighted that 52 % of gamers would abandon a session if they encountered multiple intrusive ad elements.
Losing half of an audience at the moment you are trying to engage them is hardly a winning strategy. However, advertising does not have to be a negative experience. The same research revealed that one in five players would actually increase the frequency with which they play a title if the in‑game ads were of a high standard and felt relevant. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of playing games continuing to climb, well‑crafted advertisements could find a natural home within the gaming ecosystem.
The argument for introducing a modest ad‑for‑games model is more compelling than many anticipate, as linear media already offers proof of concept. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that a hybrid model—offering both subscription‑only and ad‑supported tiers—can generate substantial revenue while expanding the audience. Should Xbox’s experiment succeed, it would not only preserve its paying subscriber base but also unlock a fresh, previously untapped income stream at a moment when the brand is eager for additional cash flow.
This development matters because console gaming is increasingly being positioned as a premium product. Prices for games, consoles, accessories, and downloadable content have risen sharply, making it harder for the average consumer to justify the expense and creating a barrier for casual gamers. Xbox itself has stated that, when executed correctly, advertising can lower the cost of entry to gaming. Mobile gaming already provides a clear illustration: ad‑supported tiers allow players to access games without the need for large upfront purchases, opening the market to a broader demographic.
Crucially, the approach remains optional. Players who prefer an ad‑free experience can continue to enjoy it by paying a subscription fee.
By offering a two‑tier system, Xbox aims to keep its loyal fan base while simultaneously making games more approachable for newcomers. Although there is no direct survey data on this specific announcement yet, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second commercial if it granted them an hour of playtime on a favorite or brand‑new title.
Xbox is likely aware of this willingness. Data from Happydemics covering 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertisements consistently outperform television, social media, and other online formats when it comes to ad recall and attribution. Players are more likely to remember an ad they saw while gaming and correctly associate it with the sponsoring brand.
This is where Xbox’s “around‑the‑game” strategy—ads displayed before the gameplay begins rather than embedded within the game world—becomes intriguing. Our research indicates that pre‑game placements enjoy a clear advantage in recall and attribution compared with intrinsic in‑game spots. The significance lies in the fact that while we can often recall ads seen on TV or scrolling through feeds, we do not always link those impressions to the correct brand. Gaming appears to operate in a league of its own for this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based gaming models.
It is essential to note that Xbox’s ads will not interrupt the actual gameplay; they will appear prior to the start of a session. In‑game ad formats, by contrast, tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability.
A hybrid approach that combines both pre‑game and in‑game ads could offer advertisers the best of both worlds, though it may also provoke greater pushback from players. Xbox has pledged that the ads will be non‑intrusive. By placing them before the game launches, the immersive experience remains untouched, a factor that benefits both the player and the advertiser, who wants their message to complement rather than disrupt the experience. Relevance will be key.
Nobody enjoys seeing an advertisement for cat food when they have no feline companion, or a promotion for a game they have already completed. Contextual, well‑targeted ads can keep players from abandoning the session while providing brands with a high‑impact platform to reach fresh 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 be sufficient to sustain the model over the long term. The move toward ad‑supported game streaming reflects a bold strategy from Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment and take calculated risks.
Only time will reveal whether this gamble pays off. Historically, many gaming ad campaigns have relied on “watch an ad, earn an extra life” mechanics.
Xbox, however, is proposing that players watch an ad simply to access a game they already own. Our existing data set does not yet indicate how this will be received. Related research on ad‑format perception shows that when participants are asked to describe ads they remember, the terms “non‑intrusive” and “immersive” frequently emerge as the most positive descriptors.
If Xbox and future adopters wish to make advertising a lasting part of gaming, these two attributes will be critical to monitor. My forecast is that Xbox will not be the first nor the last platform to trial such a model. Advertising in games has existed for years, but it has not always been designed with the player’s experience at the forefront. Should Xbox succeed in balancing revenue generation with a seamless, player‑centric ad experience, it could pave the way for other developers and publishers to follow, ultimately making video games more affordable and accessible for everyday gamers.