Virginie Chesnais serves as chief marketing officer at Happydemics, a platform that analyses advertising technology performance. For many years, gamers have looked at in‑game advertising with suspicion, and that wariness is not unfounded.
The reputation of ads in video games is mixed at best—players often encounter redirects to unrelated sites or apps, deceptive messaging, or tiny, hard‑to‑find close buttons that make the experience frustrating. 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 ran into several disruptive ad elements. Losing half of an audience the moment you try to monetize them is clearly not an effective strategy.
However, advertisements do not have to be a nuisance. The same research revealed a contrasting insight: one in five gamers indicated they would actually increase the amount of time they spent with a game if the in‑game ads were of high quality and relevance.
This suggests that well‑executed advertising can enhance, rather than detract from, the gaming experience. Xbox is currently experimenting with an ad‑supported game‑streaming service at a time when the overall cost of playing is climbing. If the company can deliver ads that meet the high‑quality standards gamers expect, those ads could find a comfortable niche within the broader gaming ecosystem. The argument for integrating a form of advertising‑for‑games model is more compelling than many industry observers assume, especially when we look at the success of linear media platforms.
Services such as Netflix, Disney+, and other streaming giants have demonstrated that offering both ad‑free and ad‑supported subscription tiers can generate significant revenue while still delivering a reliable service. Should Xbox’s experiment prove viable, the company would not only preserve its existing paying subscriber base but also unlock a previously untapped source of income—something the brand could certainly use given recent financial pressures. This development matters because console gaming is increasingly being positioned as a premium product. Prices for new titles, console hardware, accessories, and downloadable content (DLC) have risen steadily, creating a financial hurdle for the average player.
When the barrier to entry becomes too high, many potential customers simply walk away. Xbox itself has acknowledged that, when executed correctly, advertising can lower the cost of access to games. The mobile gaming sector already provides a clear precedent: ad‑supported tiers allow players to enjoy games without paying large upfront fees, opening the market to a broader audience.
By offering a similar model on consoles, Xbox could make high‑quality gaming experiences more attainable for those who might otherwise be excluded. It is also crucial to stress that any ad‑based option would be entirely optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads. This two‑tier approach aims to keep loyal fans satisfied while simultaneously attracting newcomers who are price‑sensitive.
Although we lack specific survey data on this particular announcement, it is reasonable to predict that a large majority of gamers would tolerate a brief 30‑second advertisement if it granted them an hour of gameplay on a favorite or new title. Xbox’s internal research likely supports this assumption. Data from Happydemics covering 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertisements consistently outperform traditional TV, social media, and online display ads 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 brand that displayed it.
Xbox’s “around‑the‑game” strategy—showing ads before the game starts rather than embedding them within the gameplay—adds another layer of interest. Our research indicates that these pre‑game placements generate higher ad recall and attribution scores compared with ads that appear directly inside the game environment. Why does this matter?
While people can often recall ads seen on television or scrolling through social feeds, that recall does not always translate into a clear brand connection. Gaming appears to be in a league of its own when it comes to linking ad exposure to brand memory, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based revenue models. It is essential to differentiate between pre‑game and in‑game formats. Pre‑game ads are less likely to interrupt immersion, whereas in‑game ads tend to perform better further down the marketing funnel, driving brand image uplift, consideration, interest, and overall likability.
A hybrid approach that combines both formats could theoretically give advertisers the best of both worlds, but it also risks provoking greater resistance from players who are sensitive to any form of interruption. Xbox has pledged that its ads will be non‑intrusive.
By placing advertisements before the actual gameplay begins, the company aims to preserve the immersive experience that gamers cherish. This approach benefits both the player—who enjoys an uninterrupted session—and the advertiser, who wants their message to be part of the experience rather than a disruption.
Relevance will be another critical factor. No gamer wants to see an ad for cat food when they don’t own a cat, or a promotion for a game they have already completed. By delivering contextual, personalized ads that make sense for each user, Xbox can keep players from abandoning the session while giving brands a highly targeted platform. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how the gaming community will react to pre‑game advertisements; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The move toward ad‑supported game streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has shown a willingness to experiment with new business models.
Only time will reveal whether this gamble pays off. Historically, many of our gaming‑ad initiatives have revolved around the classic “watch an ad, earn an extra life” mechanic. Xbox’s proposition is different: players would watch an ad to access a game they already own, rather than to gain a reward.
Our existing data set does not yet indicate how this particular exchange will be received. Nevertheless, broader research on ad format perception shows that when participants are asked to describe ads they remember, terms like “non‑intrusive” and “immersive” rank among the most positive descriptors. If Xbox and other companies aim to make advertising a permanent fixture in gaming, these two qualities will be essential metrics to monitor.
In my view, Xbox will neither be the first nor the last platform to test this kind of strategy. Advertising within video games has existed for years, but it has rarely been designed with the player’s experience at the forefront.
Should Xbox succeed in creating a seamless, optional ad model, it could pave the way for other publishers to follow, ultimately making video games more affordable and accessible for everyday players worldwide.