Virginie Chesnais serves as chief marketing officer at the ad‑technology analytics firm Happydemics. 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; players often encounter redirects to external sites or apps, misleading content, or closing buttons that are hard to locate, all of which fuel frustration. A recent study by eMarketer revealed that 52 percent of gamers would abandon a session if they ran into several intrusive ad elements.
Losing half of an audience at the very moment you are trying to engage them is hardly a winning tactic. However, advertising does not have to be a negative experience. The same research indicated that one in five players would actually increase the frequency with which they play a title if the in‑game advertisements were of a high standard. Xbox is currently experimenting with a new ad‑supported game‑streaming service, and as the overall cost of gaming continues to climb, well‑crafted ads could find a receptive home within the medium.
The argument for introducing a modest ad‑for‑games model is more compelling than many assume, and it has already been partially validated by the success of linear media platforms. Services such as Netflix, Disney+, and other streaming giants have demonstrated that a steady subscription fee combined with an ad‑supported tier can generate significant revenue.
Should Xbox’s experiment prove viable, the company 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 offering.
Prices for games, consoles, accessories, and downloadable content are all rising, making it harder for the average consumer to justify the expense. Xbox itself has acknowledged that, when executed correctly, advertising can lower the barrier to entry for gamers. The mobile‑gaming sector has already shown that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases.
Importantly, the approach remains optional. Players who prefer an uninterrupted experience can continue to pay for an ad‑free subscription, while those willing to tolerate a brief commercial break can enjoy a reduced cost of access. By offering a two‑tier system, Xbox hopes to keep its loyal fan base satisfied while simultaneously expanding its reach to newcomers. Although there is no specific survey data on this particular announcement yet, it is reasonable to assume that most gamers would consent to a 30‑second advertisement if it meant they could play a beloved title or a brand‑new game for an hour.
Xbox likely has internal data that supports this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertisements consistently outshine TV, social, and online ads in terms of 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—placing ads before the game launches rather than within the gameplay itself—becomes intriguing. Our data indicate that these pre‑game formats achieve a clear advantage in ad recall and accurate brand attribution when compared with ads that appear inside the game world.
The distinction matters because, while we can often recall ads seen on television or scrolling through a social feed, that recall does not always translate into a clear brand connection. 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 also crucial to note that Xbox’s ads are not embedded within the game’s narrative; they are shown beforehand. Traditional in‑game ad formats tend to perform better further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likeability.
A hybrid approach that combines both pre‑game and in‑game placements could offer advertisers the best of both worlds, though it might also provoke greater pushback from players who value an uninterrupted experience. Xbox has pledged that its advertisements will be non‑intrusive.
By delivering ads before gameplay begins, the company aims to preserve the immersive quality of the gaming session. This consideration benefits both the player—who can enjoy a seamless experience—and the advertiser, who wants its message to be part of the experience rather than a disruptive interruption. Relevance will be key.
No gamer wants to see a commercial for cat food when they don’t own a cat, or an ad for a game they have already completed. By ensuring that ads are contextually appropriate and providing a clear rationale for their placement, Xbox can keep players from abandoning the session while giving brands a potent platform to reach fresh audiences.
Nevertheless, 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 revenue generated will be sufficient to sustain the model over the long term. The move toward ad‑supported game streaming reflects a bold, risk‑taking attitude from Xbox CEO Asha Sharma, who appears willing to experiment with new monetisation strategies. Only time will reveal whether this gamble pays off.
Historically, many gaming ad campaigns have relied on a “watch an ad, get an extra life” premise. Xbox’s proposal, by contrast, asks players to view an ad simply to access a game they already own.
Our existing data set does not yet tell us how this will be received. However, broader research on ad‑format perception shows that descriptors such as “non‑intrusive” and “immersive” rank among the most positively received attributes.
If Xbox—and potentially other platforms in the future—aim to make gaming ads a success, these two qualities will be critical metrics to monitor. My forecast is that Xbox will neither be the first nor the last company to trial this kind of approach. Advertising in games has existed for years, 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 similar initiatives across the industry, ultimately making video games more affordable and accessible for everyday gamers.