Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform for advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and there are valid reasons for that wariness.
The reputation of ads in video games is mixed at best, often plagued by redirects to unrelated sites or apps, misleading content, and hide‑away close buttons that frustrate users. A recent study conducted by eMarketer revealed that 52 % of players would abandon a session if they encountered several intrusive ad elements.
Losing half of your audience at the moment you’re trying to engage them is hardly a winning formula. 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 advertisements 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 ads could find a receptive home within the console ecosystem.
The argument for a hybrid "ads‑for‑games" model is more compelling than many assume, and it already has a track record in linear media. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that offering an ad‑supported tier can generate substantial revenue while keeping a broader audience engaged. Should Xbox’s experiment prove successful, it would not only preserve its paying subscriber base but also unlock a fresh, previously untapped income stream—something the brand could greatly benefit from at this stage.
This development matters because console gaming is increasingly being positioned as a premium product. The price tags attached to games, consoles, accessories, and downloadable content are growing, 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 entry to gaming. Mobile gaming already offers a clear precedent: ad‑supported tiers allow players to enjoy games without the need for large upfront purchases, opening the market to a wider demographic. Crucially, any such system would be optional.
Players who prefer an ad‑free experience could continue to do so by paying a subscription fee. By providing a two‑tier structure, Xbox aims to keep its loyal fan base satisfied while simultaneously making games more attainable for newcomers. Although there is no concrete 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 granted them an hour of playtime on a favorite or new title. Xbox likely has internal data supporting that hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertisements consistently outperform TV, social, and other online formats when it comes to recall and attribution. Players are more likely to remember an ad they saw while gaming and to correctly associate it with the brand that served it.
Xbox’s “around‑the‑game” approach—placing ads outside the actual gameplay, such as before the game launches—adds another layer of interest. Our data indicate that these pre‑game placements have a clear advantage in recall and attribution compared with ads embedded directly within the game world. The distinction matters because, while we may recall a commercial seen on television or a banner on a social feed, that memory does not always translate into brand association.
Gaming appears to sit in its own category for this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based models. It is also important to note that Xbox’s ads would not be intragame; they would appear prior to gameplay. In‑game ad formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likability. A combined strategy—leveraging both pre‑game and in‑game ads—could offer advertisers the best of both worlds, though it might also provoke greater pushback from players.
Xbox has pledged that the advertisements will be non‑intrusive. By delivering ads before the gaming experience begins, the company aims to preserve immersion and avoid disrupting the player’s flow.
This consideration benefits both the audience, who expects a seamless experience, and advertisers, who want their messages to be part of the environment rather than a nuisance. Relevance will be key. No gamer wants to see a promotion for cat food when they don’t own a cat, or an ad for a game they have already completed.
Contextual, targeted ads that make sense for the individual player will help prevent early exits and give brands a powerful platform to reach fresh audiences. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to this new ad format; 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 shown a willingness to experiment with unconventional ideas.
Whether this strategy will pay off remains to be seen. Historically, many gaming ad campaigns have relied on "watch an ad, earn an extra life" mechanics.
Xbox’s proposal, however, asks players to view an ad simply to access a game they already own. Our existing data set does not yet reveal how this will be received.
Related research on ad format perception—where participants who recall an ad are asked to choose descriptive adjectives—has highlighted "non‑intrusive" and "immersive" as the top descriptors. If Xbox and future adopters want advertising in gaming to succeed, these two qualities will be essential metrics to monitor. My forecast is that Xbox will neither be the first nor the last platform to test such a model.
Advertising within games has existed for years, but rarely 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, ultimately making video games more accessible to everyday players.