Virginie Chesnais serves as chief marketing officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and that wariness is understandable. The reputation of ads in video games is mixed at best; players often encounter redirects to unrelated websites or apps, deceptive or misleading content, and frustratingly hard‑to‑find close buttons that break immersion.
A recent study conducted by eMarketer highlighted the severity of the issue: more than half of respondents—52 percent—said they would stop playing a title if they were bombarded with multiple intrusive ad features. Losing half of an audience at the very moment you try to engage them is hardly an effective strategy.
However, advertising does not have to be a negative experience. The same eMarketer survey revealed a more optimistic finding: one in five gamers indicated they would actually play a game more often if the in‑game advertisements were of high quality and relevance.
This suggests that, when executed correctly, ads can enhance rather than detract from the gaming experience. In this context, Xbox’s current experiment with an ad‑supported game‑streaming service becomes especially intriguing, particularly as the overall cost of gaming continues to climb.
The rationale for introducing a modest advertising model into gaming mirrors what has already succeeded in linear media. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that offering both ad‑free and ad‑supported tiers can generate substantial revenue while still attracting price‑sensitive customers. If Xbox’s ad‑supported tier proves viable, it could not only preserve the existing subscriber base but also unlock a brand‑new revenue stream at a moment when the company is eager for additional income.
This development matters because console gaming is increasingly positioning itself as a premium entertainment service. Prices for new consoles, flagship titles, accessories, and downloadable content (DLC) have all risen sharply in recent years, creating a financial barrier for the average gamer. Xbox itself has acknowledged that, when done thoughtfully, advertising can lower the cost of entry for players who might otherwise be priced out of the ecosystem.
Mobile gaming already provides a clear precedent: many popular mobile titles offer a free, ad‑supported version that allows players to enjoy the core experience without paying an upfront fee, with the option to purchase an ad‑free version for a modest price. Importantly, Xbox’s model would be entirely optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those who are willing to view ads could access the same content at a reduced cost or even for free. By presenting a two‑tier system, Xbox aims to retain its loyal fan base while simultaneously expanding accessibility for newcomers. Although no formal survey data exists yet on gamer attitudes toward Xbox’s specific proposal, it is reasonable to assume that a large majority would tolerate a short, 30‑second advertisement if it meant they could play a beloved title or try a new game for an hour without paying the full price. The data that Happydemics has collected from 285 in‑game campaigns across the United Kingdom and North America supports this intuition.
Their research shows that in‑game advertisements consistently outperform traditional TV, social media, and online display ads when it comes to recall and attribution. In other words, players are more likely to remember an ad they see while gaming and correctly associate it with the brand that placed it. Xbox’s “around‑the‑game” approach—where ads appear before the game launches rather than embedded within the gameplay itself—adds another layer of potential benefit.
Happydemics’ findings indicate that pre‑game ad formats achieve higher recall and attribution scores compared with ads that appear directly inside the game world. This distinction matters because while we may remember a commercial that flashes on a television screen, we do not always link that memory to the brand that produced it. Gaming, however, appears to create a stronger mental connection between the ad and the advertiser, which likely explains why companies such as EA and Xbox are exploring ad‑based revenue models more aggressively. It is crucial to note that Xbox’s ads would be pre‑game rather than in‑game.
In‑game ad formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability. A hybrid strategy that combines both pre‑game and in‑game placements could theoretically give advertisers the best of both worlds, but it also risks provoking greater pushback from players who are sensitive to any interruption of their immersive experience.
Xbox has pledged that any advertisements will be non‑intrusive. By positioning ads before the gameplay begins, the company hopes to avoid breaking immersion.
This is a win‑win for both parties: players retain an uninterrupted experience once the game starts, and advertisers benefit from a captive audience that is primed to receive the message without feeling annoyed. Relevance will be another key factor.
No gamer wants to see an ad for cat food when they do not own a cat, or an advertisement for a game they have already completed. Contextual, targeted ads that align with a player’s interests and behavior will be essential to keep viewers engaged and prevent them from abandoning the session at the first sign of an irrelevant commercial. By delivering ads that feel purposeful, Xbox can protect the user experience while offering brands a high‑impact platform to reach new audiences.
Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how players will react to a pre‑game ad model that is tied to games they already own, rather than a “watch an ad, get an extra life” mechanic that has been common in mobile titles.
The second unknown is whether the ad revenue generated will be sufficient to sustain the model as a long‑term offering. The decision to explore ad‑supported game streaming reflects a bold, risk‑taking mindset from Xbox’s leadership, particularly CEO Asha Sharma, who has demonstrated a willingness to experiment with new business models. Time will ultimately reveal whether this strategy pays off.
Historically, many of the gaming ad campaigns we have studied relied on a direct exchange: watch an advertisement and receive an in‑game reward, such as an extra life or bonus currency. Xbox’s proposal differs because it asks players to watch an ad simply to access a game they already own. Our existing data set does not yet provide a clear answer on how this will be received, but related research on ad format perception offers some clues. When participants were asked to describe ad formats they remembered positively, the terms “non‑intrusive” and “immersive” emerged as the most popular descriptors.
If Xbox—and potentially other platforms in the future—are to make advertising a lasting part of the gaming landscape, they will need to prioritize these two qualities. Looking ahead, I anticipate that Xbox will neither be the first nor the last major console manufacturer to test ad‑supported models. Advertising has been part of video games for decades, but it has rarely been implemented with the player’s experience at the forefront.
Should Xbox succeed in delivering ads that feel seamless, relevant, and optional, it could pave the way for a new revenue paradigm across the industry, making video games more affordable and accessible for everyday gamers while providing brands with a uniquely engaging advertising channel.