Virginie Chesnais serves as the 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 sites or apps, deceptive messaging, or closing buttons that are difficult to locate, all of which create frustration. A recent study conducted by eMarketer highlighted that 52 % of gamers would abandon a session if they ran into several intrusive ad elements. Losing half of an audience at the moment you are trying to engage them is hardly an effective approach.
However, advertisements do not have to be a negative experience. The same research indicated that one in five gamers would actually increase the frequency with which they play a title if the in‑game ads were of high quality and relevance.
With Xbox currently piloting an ad‑supported game‑streaming service, and with the overall cost of gaming steadily climbing, there is a genuine opportunity for well‑crafted ads to find a receptive home inside the gaming ecosystem. The rationale for introducing an ad‑for‑games model is more compelling than many might assume, and it has already been demonstrated in the world of linear media.
Services such as Netflix, Disney+, and other streaming platforms have shown that a hybrid model—offering both ad‑free and ad‑supported tiers—can generate substantial revenue while keeping a broad subscriber base. Should Xbox’s experiment prove successful, it could not only preserve the existing paying subscriber pool but also unlock a fresh, previously untapped source of income 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.
The price tags attached to new games, consoles, accessories, and downloadable content are 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.
Mobile gaming already provides a clear example: ad‑supported tiers allow players to experience games without having to pay a large upfront fee, thereby expanding the overall market. Importantly, the ad‑supported option would be entirely optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are willing to view short commercials could enjoy the same content at a reduced or zero cost. By offering a two‑tier system, Xbox hopes to keep its loyal fan base satisfied while simultaneously making games more accessible to newcomers. Although no formal survey has yet been released on the latest Xbox announcement, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it meant gaining an hour of playtime on a favorite or new title. Xbox’s own data is likely to confirm this hypothesis.
Happydemics’ analysis of 285 in‑game advertising campaigns across the United Kingdom and North America reveals 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. This advantage becomes even more pronounced when the ads are placed “around the game”—for example, before the gameplay begins—rather than embedded directly within the game world. Our data indicate that these pre‑game placements generate higher recall and clearer brand attribution than intrinsic in‑game placements.
The distinction is crucial because while consumers may notice advertisements on TV or in social feeds, they do not always link those impressions to specific brands. Gaming appears to operate in a league of its own regarding this metric, which likely explains why companies such as Xbox and Electronic Arts are increasingly exploring ad‑based monetisation models. It is worth noting that Xbox’s plan focuses on pre‑game ads rather than intrusive in‑game banners. In‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likeability.
A hybrid approach—combining both pre‑game and in‑game ads—could theoretically offer the best of both worlds for advertisers, though it may also provoke greater pushback from players who value an uninterrupted experience. Xbox has pledged that its ads will not be disruptive. By placing commercials before the game starts, the company aims to preserve the immersive nature of the gameplay itself.
This approach benefits both players, who maintain their focus on the game, and advertisers, who want their messages to be part of a seamless experience rather than an annoyance. 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 make sense for the individual player will help prevent immediate abandonment and provide brands with a high‑quality 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 decision to explore ad‑supported game streaming reflects the bold, risk‑taking mindset of Xbox CEO Asha Sharma, but only time will reveal whether the strategy pays off. Historically, many gaming ad campaigns have relied on a “watch an ad, earn an extra life” mechanic. Xbox’s proposal is different: it asks players to watch an ad simply to access a game they already own.
Our existing data set does not yet indicate how this will be received. However, broader research on ad‑format perception shows that when respondents are asked to describe ads they remember, terms such as “non‑intrusive” and “immersive” rank among the most positive descriptors. If Xbox—and potentially other platforms in the future—are to make advertising a sustainable part of gaming, these two qualities will be essential metrics to monitor. My forecast is that Xbox will not be the first nor the last company to experiment with this model.
Advertising in video games has existed for many years, but it has rarely been designed with the player’s experience at its core. Should Xbox manage to strike the right balance, it could pave the way for other developers and publishers to adopt similar strategies, ultimately making video games more affordable and reachable for everyday gamers.