Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have viewed in‑game advertising with suspicion, and that wariness is understandable. The reputation of ads within games is mixed at best: often they redirect users to unrelated websites or apps, sometimes the content is misleading, and the close‑button is frequently hard to locate, leading to frustration.
A recent study conducted by eMarketer highlighted that 52 % of players would stop playing if they encountered several intrusive ad elements. Losing half of an audience at the very moment you’re trying to engage them is hardly an effective approach. However, advertising does 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 the overall cost of gaming continuing to climb, well‑crafted advertisements could find a receptive home in the console ecosystem.
The argument for incorporating a modest ad‑for‑games model is stronger than many assume, and it is already partially validated by the success of linear media. Streaming giants such as Netflix and Disney have demonstrated that offering an ad‑supported tier can generate substantial revenue while still delivering a consistent service.
Should Xbox’s experiment succeed, it would not only preserve its subscription‑based revenue but also unlock a completely new, previously untapped income stream—a development the brand could certainly use at this stage. This is significant because console gaming is increasingly being positioned as a premium offering.
Prices for games, hardware, accessories, and downloadable content have all risen, making it harder for the average consumer to justify the expense. The result is a growing barrier that keeps many potential players on the sidelines. Xbox itself has stated that, when executed correctly, advertising can lower the cost of entry to gaming. The mobile‑gaming sector already provides proof of concept: ad‑supported tiers allow players to engage with games without paying large upfront fees, opening the market to a broader audience.
Crucially, participation would be optional. Players who prefer an ad‑free experience could continue to do so by paying a subscription fee.
By offering a two‑tier system, Xbox hopes to keep its existing loyal fan base while simultaneously making games more approachable for newcomers. Although there is no specific survey data on this particular announcement yet, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second commercial if it meant they could enjoy an hour of their favorite title or a brand‑new game. Xbox likely has internal data that supports this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America reveals that in‑game advertisements consistently outperform television, social media, and other online formats when it comes to ad recall and attribution.
Players are more likely to remember an ad they saw while playing and correctly associate it with the brand that delivered it. This is where Xbox’s “around‑the‑game” strategy—ads that appear before the gameplay begins rather than within the game world—becomes intriguing. Our data indicate that pre‑game placements enjoy a clear advantage in terms of recall and attribution compared with intrinsic, in‑game placements. The distinction matters because, while we can often recall ads that flash on a TV screen or appear in a social feed, we do not always connect those impressions to the sponsoring brand.
Gaming, it appears, excels in this metric, which may explain why companies like Xbox and EA are increasingly exploring ad‑based models. It is also important to note that Xbox’s ads will not be embedded within the gameplay itself; they will be shown beforehand. Traditional in‑game formats tend to perform better further down the conversion funnel, boosting brand‑image uplift, consideration, interest, and overall likability.
A hybrid approach that combines pre‑game and in‑game ads could theoretically offer advertisers the best of both worlds, though it could also provoke greater pushback from players. Xbox has pledged that the advertisements will be non‑intrusive. By placing ads before the game starts, the immersive experience remains untouched, which is a win for both gamers and advertisers.
Advertisers want their messages to be part of the experience, not a disruptive interruption. Relevance will be key.
No player wants to see an ad for cat food when they don’t own a cat, or an advertisement for a game they have already completed. Contextual, well‑targeted ads that provide a clear reason for being shown will help keep players from abandoning the session while giving brands an 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 decision 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. Only time will reveal whether this strategy pays off. Historically, many of our gaming‑ad projects have revolved around “watch an ad, earn an extra life” mechanics. Xbox’s proposal is different: it asks players to watch an ad in order to access a game they already own.
Our existing data set does not yet tell us how this will be received. Research on ad‑format perception—where participants who recall an ad are asked to select positive descriptors—shows that “non‑intrusive” and “immersive” are among the most favored terms.
If Xbox and future adopters want to make advertising in gaming a success, these two attributes will need to be closely monitored. My forecast is that Xbox will neither be the first nor the last to test such a model. Advertising has been part of gaming 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 companies to follow, ultimately making video games more accessible to the everyday gamer.