Virginie Chesnais serves as chief marketing officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have approached in‑game advertising with suspicion, and their concerns are not unfounded.
The reputation of ads within video games is mixed: players often encounter redirects to unrelated websites or apps, misleading content, or cumbersome close buttons that are hard to locate. These annoyances have contributed to a general wariness of advertising in the gaming space.
A recent study conducted by eMarketer highlighted the severity of the issue: 52 % of respondents said they would stop playing a title if they ran into multiple intrusive ad elements. Losing half of your audience at the moment you are trying to engage them is hardly an effective strategy. However, advertisements do not have to be a negative experience.
The same survey revealed that one in five gamers would actually increase the frequency with which they play a game if the in‑game ads were of high quality and relevance. This suggests that, when executed thoughtfully, ads can enhance rather than detract from the gaming experience.
Xbox is currently piloting an ad‑supported game‑streaming service at a time when the overall cost of playing is climbing steadily. In this context, well‑crafted ads could find a receptive home within the ecosystem.
The rationale for introducing an ad‑based model to games mirrors what has already been proven in linear media. Services such as Netflix, Disney+, and other streaming platforms demonstrate that a dual‑tier approach—offering both a premium ad‑free tier and a lower‑cost ad‑supported tier—can generate substantial revenue while expanding the audience. If Xbox’s experiment succeeds, it could not only preserve revenue from existing subscription customers but also unlock a brand‑new, previously untapped source of income—a development the company could greatly benefit from given its current financial pressures. This is especially pertinent because console gaming is increasingly positioned as a premium offering.
Prices for hardware, software, accessories, and downloadable content have risen to levels that many casual players find difficult to justify. The resulting barrier limits the reach of the medium and narrows the pool of potential new fans. Xbox itself has stated that, when implemented correctly, advertising can help lower the cost of entry to gaming. The mobile‑gaming sector already provides evidence that ad‑supported tiers can serve as a gateway, allowing players to experience games without the need for large upfront payments.
Crucially, the model remains optional. Users who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads. By offering a two‑track system, Xbox hopes to keep its core community satisfied while simultaneously making games more accessible to newcomers who might otherwise be priced out. Although there is no specific survey data on the latest Xbox announcement, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second commercial if it granted them an hour of gameplay on a favorite or newly released title.
Xbox’s internal data likely supports this hypothesis. Happydemics has analyzed 285 in‑game advertising campaigns across the United Kingdom and North America, finding that in‑game ads consistently outperform television, social media, and other online formats in terms of recall and attribution. In other words, players are more likely to remember an ad they saw while gaming and correctly associate it with the sponsoring brand.
The "around‑the‑game" approach that Xbox is testing—displaying ads before the gameplay begins rather than embedding them within the game world—adds another layer to this insight. Our research indicates that pre‑game placements generate higher recall and attribution rates compared with ads that appear directly inside the game environment. This distinction matters because, while many ads on TV or social feeds are memorable, they do not always translate into brand recognition.
Gaming appears to occupy a unique niche where ad exposure more readily converts into brand awareness, which explains why companies like Xbox and EA are increasingly exploring advertising‑based revenue models. It is important to note that Xbox’s initial rollout focuses on pre‑game ads, not intrusive in‑game banners.
In‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likability. A hybrid strategy that combines both pre‑game and in‑game placements could theoretically offer advertisers the best of both worlds, but it also risks greater pushback from players who value an uninterrupted experience. Xbox has pledged that the ads will be non‑intrusive. By serving them before the game starts, the company aims to preserve the immersive quality of the gameplay itself.
This approach benefits both players—who avoid interruptions during play—and advertisers, who want their messages to complement rather than disrupt the experience. Relevance will be another key factor.
No gamer wants to see an advertisement for cat food when they don’t own a cat, or for a game they have already completed. Contextual, targeted ads that align with a player’s interests are more likely to be accepted and less likely to cause users to abandon the session. Nevertheless, Xbox is navigating uncharted territory.
The first unknown is how players will react to the presence of ads at all; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The decision to explore ad‑supported streaming reflects a willingness by Xbox CEO Asha Sharma to experiment and take calculated risks. Whether this gamble will pay off remains to be seen. Historically, many gaming ad campaigns have relied on a "watch an ad, earn an extra life" model.
Xbox’s proposition is different: players would watch an ad to gain access to a game they already own. Our existing data set does not yet reveal how this particular exchange will be perceived. 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, hope to make gaming ads a lasting success, these two qualities will need to be closely monitored and optimized. In my view, Xbox will not be the first nor the last company to test this approach.
Advertising within games has existed for years, but rarely with the player’s experience as the primary focus. Should Xbox manage to strike the right balance, it could pave the way for other developers to adopt similar models, ultimately making video games more affordable and accessible for the everyday gamer.