Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have viewed in‑game advertisements with suspicion, and that wariness is understandable.
The reputation of ads within games is mixed at best, often plagued by issues such as redirects to unrelated websites or apps, misleading content, and close buttons that are difficult to locate—frustrations that can quickly sour the experience. A recent study conducted by eMarketer highlighted the severity of the problem: 52 % of respondents said they would stop playing a title if they encountered multiple intrusive ad elements. Losing half of an audience at the very moment you are trying to engage them is hardly an effective strategy. Nevertheless, advertisements do not have to be synonymous with annoyance.
The same research revealed a more optimistic insight: one in five gamers indicated they would increase the frequency with which they played a game if the in‑game ads were of high quality and relevance. This suggests that, when executed properly, advertising can actually enhance rather than detract from the gaming experience.
Xbox is currently experimenting with an ad‑supported game‑streaming service, and the overall cost of gaming continues to climb. In that context, well‑crafted ads could find a natural home within the ecosystem. The argument for incorporating an ads‑for‑games model is more compelling than many industry observers might assume, especially when we look at the success of linear media platforms. Services such as Netflix, Disney+, and other video‑streaming giants have demonstrated that a tiered approach—offering both ad‑free and ad‑supported subscriptions—can generate substantial revenue while expanding the audience base.
If Xbox’s experiment proves viable, it could not only preserve its existing subscriber base but also unlock a completely new revenue stream at a moment when the company is eager for fresh income. The relevance of this development is amplified by the fact that console gaming is increasingly positioned as a premium offering.
Prices for games, consoles, accessories, and downloadable content have risen steadily, making it more difficult for the average consumer to justify the expense. This creates a barrier that limits the reach of gaming to a narrower, more affluent segment.
Xbox itself has argued that, when handled correctly, advertising can lower the cost of entry for players. The mobile‑gaming sector already provides evidence that ad‑supported tiers can attract users who might otherwise be deterred by high upfront costs. By offering a free or low‑cost entry point, developers can broaden their user base and later monetize through optional purchases or subscriptions. Crucially, the model remains optional.
Players who prefer an uninterrupted experience can still opt for a paid subscription that removes ads entirely. This two‑tier structure enables Xbox to retain its loyal, ad‑averse fans while simultaneously inviting newcomers who are price‑sensitive.
Although we lack specific survey data on the latest Xbox announcement, it is reasonable to assume that a large majority of gamers would tolerate a short 30‑second commercial if it meant gaining an hour of gameplay on a beloved or new title. Xbox’s internal research likely supports this hypothesis.
Data from Happydemics, covering 285 in‑game campaigns across the United Kingdom and North America, consistently shows that in‑game advertisements outperform traditional TV, social, and online placements 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 is where Xbox’s “around‑the‑game” strategy becomes especially interesting. By placing ads before the game launches—rather than embedding them within the gameplay itself—Xbox can leverage the higher recall rates associated with pre‑game exposure while preserving the immersive nature of the actual session. Our data indicate that these pre‑game formats generate a distinct advantage in ad recall and brand attribution when compared with ads that appear directly inside the game world.
The distinction matters because, while we may notice an advertisement while scrolling through a social feed or watching television, we do not always connect that ad to a specific brand. Gaming, however, appears to occupy a unique position in the advertising landscape, delivering stronger brand‑linking metrics. This likely explains why companies such as EA and now Xbox are exploring ad‑based revenue models more aggressively.
It is also worth noting that Xbox’s ads are intended to be pre‑game rather than in‑game. In‑game formats tend to excel later in the marketing funnel, driving brand‑image uplift, consideration, interest, and overall likability. A hybrid approach—combining both pre‑game and in‑game placements—could theoretically provide the best of both worlds for advertisers, though it may also provoke greater pushback from players who are sensitive to interruptions. Xbox has pledged that the advertisements will be non‑intrusive.
By delivering ads before the actual gameplay begins, the company aims to avoid breaking the player’s immersion. This approach benefits both the audience, who can enjoy an uninterrupted session, and the advertisers, who want their messages to be part of a seamless experience rather than a disruptive nuisance. Relevance is another essential factor. No gamer wants to see an ad for cat food when they don’t own a cat, or an ad for a game they have already completed.
By ensuring that ads are contextual—tailored to the player’s interests, location, or recent activity—Xbox can increase the likelihood that users will engage positively rather than abandon the session. Nevertheless, Xbox is navigating largely uncharted waters. The first unknown is how players will react to the presence of ads at all, even if they are placed before gameplay.
The second unknown is whether the ad revenue generated will be sufficient to sustain the model as a long‑term offering. 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. Whether this gamble will pay off remains to be seen. Historically, many gaming ad campaigns have relied on a “watch an ad, earn an extra life” mechanic.
Xbox’s proposal diverges from that model by asking players to watch an ad in order to access a game they already own. Our existing data set does not yet reveal how gamers will perceive this shift. However, broader research on ad‑format perception shows that when participants are asked to describe the most appealing attributes of an advertisement, terms like “non‑intrusive” and “immersive” consistently rank among the top choices. If Xbox and future industry players wish to make advertising a lasting component of gaming, they will need to prioritize these qualities.
In my view, Xbox will not be the first nor the last company to trial such a strategy. Advertising within games has existed for years, but it has rarely been designed with the player’s experience at the forefront.
Should Xbox succeed in delivering ads that feel natural, relevant, and unobtrusive, it could pave the way for other developers and publishers to adopt similar models, ultimately making video games more affordable and accessible for the everyday gamer.