Virginie Chesnais serves as Chief Marketing Officer at Happydemics, a platform that analyses ad‑tech performance. For many years, gamers have viewed in‑game advertising with suspicion, and the wariness is understandable.
The reputation of ads in video games is mixed: many users encounter redirects to unrelated sites or apps, misleading content, or hard‑to‑find close buttons, all of which generate frustration. A recent study by eMarketer highlighted that 52 % of players would stop playing if they ran into multiple intrusive ad elements.
Losing half of an audience at the moment you are trying to engage them is hardly an effective approach. However, 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 ads were of high quality and relevance. Xbox is currently piloting an ad‑supported game‑streaming service at a time when the overall cost of playing is climbing. In this context, well‑executed, high‑caliber advertisements could find a natural fit within the gaming ecosystem.
The argument for incorporating an ad‑for‑games model is stronger than many assume, and it is already validated to some extent by linear media. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that offering both ad‑free and ad‑supported tiers can generate substantial revenue while keeping a broad subscriber base. Should Xbox’s experiment prove successful, the company would not only preserve its existing paying members but also unlock a completely new revenue stream—a crucial development given the brand’s current financial pressures. This issue matters because console gaming is increasingly being positioned as a premium offering.
Prices for games, consoles, accessories, and downloadable content continue to rise, creating a financial hurdle for the average player. Xbox itself has stated that, when executed correctly, advertising can help lower the barrier to entry for gamers. The mobile‑gaming sector already shows that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases. Importantly, the model would be entirely optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are comfortable with occasional commercials could enjoy a reduced‑price or free tier. By providing a two‑tier system, Xbox hopes to retain its loyal fan base while simultaneously making games more approachable for newcomers.
Although concrete survey data on this particular rollout is not yet available, it is reasonable to predict that most gamers would tolerate a 30‑second advertisement if it meant gaining an hour of playtime on a favourite or new title. Xbox likely has internal data supporting this assumption.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America indicates that in‑game advertisements consistently outperform television, social media, and other online formats when it comes to recall and attribution. In other words, players are more likely to remember an ad they see while gaming and correctly associate it with the brand that delivered it.
Xbox’s “around‑the‑game” strategy—showing ads before the game launches rather than embedding them within the gameplay—adds another layer to this picture. Our data suggest that pre‑game placements achieve higher recall and attribution scores compared with ads that appear directly inside the game environment.
The distinction matters because, while we may recall an advertisement that flashes on a TV screen or scrolls through a social feed, we do not always link that memory to a specific brand. Gaming appears to operate in its own league for this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based models. It is essential to note that Xbox’s ads would be pre‑game, not intragame. Traditional in‑game ad formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability.
A hybrid approach that combines both pre‑game and in‑game ads could theoretically offer advertisers the best of both worlds, but it also runs the risk of provoking greater pushback from players who value an uninterrupted experience. Xbox has pledged that any advertisements will be non‑intrusive. By placing ads before the gameplay begins, the company aims to preserve the immersive nature of the experience. This approach benefits both players—who avoid interruptions during play—and advertisers, who want their messages to be part of the experience rather than a disruptive interruption.
Relevance will be key. No gamer wants to see an advertisement for cat food when they don’t own a cat, or a promotion for a game they have already completed. By delivering contextual, audience‑specific ads, Xbox can keep players from abandoning a session at the sight of an irrelevant commercial while giving brands a highly effective platform to reach new consumers. Nevertheless, Xbox is venturing into uncharted territory.
The first unknown is how players will react to pre‑game advertising; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The decision to explore ad‑supported streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has shown a willingness to experiment with new business models. Time will ultimately reveal whether this strategy pays off. Historically, many gaming ad campaigns have relied on the classic "watch an ad, earn an extra life" mechanic.
Xbox’s proposal is different: it asks players to watch an ad to access a game they already own. Our existing data set does not yet indicate how this will be received. Related research on ad‑format perception shows that when participants are asked to describe ads they remember, terms like "non‑intrusive" and "immersive" frequently emerge as positive descriptors. If Xbox—and potentially other platforms—are to make advertising in gaming a lasting success, these two qualities will need to be closely monitored.
My forecast is that Xbox will not be the first nor the last company to test this approach. Advertising within games has existed for years, but it has often been implemented without the player’s experience as a primary focus. Should Xbox manage to strike the right balance, it could pave the way for similar initiatives across the industry and, importantly, make video games more financially accessible to everyday gamers.