Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have approached in‑game advertising with skepticism, and that wariness is understandable. The reputation of ads in interactive entertainment is mixed at best; players often encounter redirects to unrelated websites or apps, deceptive messaging, or cumbersome close buttons that are hard to locate. A recent study by eMarketer highlighted that 52 % of gamers would abandon a session if they ran into multiple disruptive ad elements.
Losing half of your audience at the very moment you’re trying to engage them is hardly an effective approach. Nevertheless, advertising does not have to be a negative experience. The same research revealed 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.
This suggests that, when executed correctly, ads can enhance rather than detract from the gaming experience. Xbox is currently piloting an ad‑supported game‑streaming service at a time when the overall cost of playing is climbing steadily.
High‑quality, non‑intrusive ads could therefore find a natural home within the gaming ecosystem. The logic behind offering an ad‑supported tier mirrors the model that has proven successful in linear media.
Platforms such as Netflix, Disney+, and other streaming services have demonstrated that a hybrid approach—combining a subscription‑free, ad‑supported tier with a premium, ad‑free option—can generate substantial revenue while expanding the audience base. If Xbox’s experiment succeeds, it could not only preserve its existing subscriber base but also unlock a fresh, previously untapped revenue stream at a moment when the brand is eager for new income sources.
The importance of this development is amplified by the fact that console gaming is increasingly positioned as a premium service. Prices for games, consoles, accessories, and downloadable content continue to rise, creating a financial hurdle for the average player.
Xbox itself has acknowledged that, when handled correctly, advertising can lower the barrier to entry and make gaming more affordable. The mobile gaming sector already provides a clear precedent: ad‑supported tiers allow players to access games without paying large upfront fees, thereby widening the market. Crucially, any advertising model Xbox introduces would be optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those willing to tolerate a short commercial could enjoy a reduced‑cost or even free pathway to the same content. This two‑tier system aims to retain loyal fans while simultaneously inviting newcomers who might otherwise be deterred by price.
Although concrete survey data on the latest Xbox announcement is not yet available, it is reasonable to assume that most gamers would tolerate a 30‑second advertisement if it granted them an hour of playtime on a favorite or new title. Industry data from Happydemics, covering 285 in‑game campaigns across the UK and North America, consistently shows that in‑game ads outperform television, social, and online formats in terms of recall and attribution. Players are more likely to remember and correctly associate an ad seen within a game with the brand behind it. Xbox’s “around‑the‑game” strategy—displaying ads before the gameplay begins rather than embedding them within the interactive environment—adds another layer to this advantage.
Our research indicates that pre‑game placements achieve higher recall and attribution scores compared with intrinsic in‑game placements. This distinction matters because while viewers can recall ads seen on TV or social feeds, they often fail to link those impressions to a specific brand. Gaming, by contrast, appears to create a stronger mental connection between the ad and the advertiser, which explains why companies like EA and Xbox are increasingly exploring ad‑based models.
It is essential to note that Xbox’s ads are designed to be pre‑game, not in‑game. In‑game formats tend to excel further down the conversion funnel, driving brand‑image uplift, consideration, interest, and likability. A hybrid approach—combining both pre‑game and in‑game ads—could theoretically offer advertisers the best of both worlds, though it might also provoke greater resistance from players who are sensitive to interruptions. Xbox has pledged that any advertisements will be non‑intrusive.
By placing ads before the game starts, the company hopes to preserve the immersive experience that gamers value. This approach benefits both players, who avoid disruptions during gameplay, and advertisers, who want their messages to be part of a seamless experience rather than a nuisance.
Relevance will be key. No gamer wants to see a commercial for cat food when they don’t own a cat, or for a game they have already completed. Contextual, targeted ads that make sense in the player’s current situation will help prevent frustration and keep users engaged, while simultaneously giving brands an effective platform to reach new audiences. Nonetheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to a pre‑game ad model, and the second is whether the revenue generated will justify making the approach a permanent feature. The decision to explore ad‑supported game streaming reflects the boldness of Xbox CEO Asha Sharma, who has shown a willingness to experiment and take calculated risks.
Only time will reveal whether the strategy pays off. Historically, many gaming ad campaigns have relied on “watch an ad, earn an extra life” mechanics.
Xbox’s proposal differs: it asks players to watch an ad in order to access a game they already own. Our existing data set does not yet indicate how this particular exchange will be received. Related research on ad‑format perception shows that when participants are asked to describe ads they recall, 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 gaming ads successful, they will need to prioritize these qualities. In my view, Xbox will not be the first nor the last company to test this model. Advertising in games has existed 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 publishers to adopt similar strategies, ultimately making video games more accessible and affordable for everyday gamers.