Virginie Chesnais serves as Chief Marketing Officer at the ad‑technology analytics firm Happydemics. For many years, gamers have approached in‑game advertising with suspicion, and the wariness is understandable. The reputation of ads within video games is mixed at best, often plagued by redirects to unrelated sites, misleading content, or hide‑away close buttons that frustrate users.
A recent study by eMarketer highlighted that 52 % of players would abandon a session if they encountered several disruptive ad elements. Losing half of the audience at the moment you’re trying to engage them is hardly a winning strategy. Nevertheless, advertising does 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 title if the in‑game advertisements were of high quality and relevance.
Enter Xbox, which is currently piloting an ad‑supported game‑streaming service at a time when the overall cost of gaming continues to climb. High‑calibre ads could therefore find a welcoming niche within the gaming ecosystem.
The logic behind offering an ad‑for‑games model is more compelling than many anticipate, and it has already been demonstrated in linear media. Platforms such as Netflix, Disney+, and other streaming services have shown that a hybrid model—offering both ad‑free and ad‑supported tiers—can generate significant revenue while expanding the audience. If Xbox’s experiment proves viable, it could not only preserve its subscription base but also unlock an entirely new, previously untapped stream of income—a development the company could certainly use right now. This issue matters because console gaming is increasingly positioning itself as a premium service.
Prices for games, consoles, accessories, and downloadable content keep rising, 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 accessing games. Mobile gaming has already demonstrated that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases. Crucially, the system would be optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those who are open to watching ads could enjoy a reduced‑price or even free access model. By offering a two‑tier structure, Xbox hopes to keep its loyal fan base intact while simultaneously making games more approachable for newcomers. Although no formal survey data exists yet on this particular rollout, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it meant they could play a favorite title or a new release for an hour without paying the full price.
Xbox likely has internal data supporting this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertisements consistently outperform television, social media, and standard online ads in terms of recall and attribution. Players are far more likely to remember an ad they saw while playing and correctly associate it with the sponsoring brand.
Xbox’s “around‑the‑game” approach—placing ads outside the actual gameplay, such as pre‑game slots—adds another layer to this picture. Our data indicate that these pre‑game formats generate a noticeable edge in ad recall and attribution compared with ads embedded directly within the game environment.
The distinction is important because, while we can often recall ads we encounter on TV or scrolling through feeds, that recollection does not always translate into a clear brand connection. Gaming appears to occupy a unique space where ad recall and brand association are especially strong, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based monetisation models. It is also vital to note that Xbox’s ads would not be intrusive in‑game placements; they would appear before the game starts.
In‑game ad formats typically excel further down the marketing funnel, delivering stronger lifts in brand image, consideration, interest, and likeability. A hybrid strategy that combines pre‑game and in‑game ads could theoretically give advertisers the best of both worlds, though it might also provoke greater resistance from players.
Xbox has promised that the advertisements will be non‑intrusive. By serving ads before gameplay begins, the company aims to preserve the immersive experience that gamers value. This approach benefits both the player—who can enjoy uninterrupted sessions—and the advertiser, who wants its message to feel like a natural part of the experience rather than a disruption. Relevance will be key.
Nobody wants to see a cat‑food commercial when they don’t own a cat, or an advertisement for a game they have already completed. By delivering contextual, purposeful ads, Xbox can keep players from abandoning the session while giving brands a highly effective platform to reach new audiences. Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how players 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 to explore ad‑supported game streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with new business models. Whether this gamble pays off remains to be seen. Historically, many gaming ad initiatives have revolved around “watch an ad, earn an extra life” mechanics. Xbox’s proposal is different: it asks players to watch an ad to access a game they already own.
Our existing data set does not yet reveal how this particular trade‑off will be received. However, research on ad‑format perception—where participants who recall an ad are asked to describe the format using positive adjectives—has consistently highlighted “non‑intrusive” and “immersive” as top descriptors. If Xbox and future adopters want advertising in gaming to succeed, these two qualities will need to be closely monitored.
My forecast is that Xbox will neither be the first nor the last platform to test this 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 other gaming companies to follow suit, ultimately making video games more accessible and affordable for the everyday gamer.