Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and their concerns are understandable.
The reputation of ads in video games is mixed at best; players often encounter redirects to unrelated websites or apps, deceptive or irrelevant content, and sometimes struggle to locate the tiny close buttons that dismiss the interruptions. A recent study conducted by eMarketer highlighted the severity of the problem: more than half—52 percent—of respondents said they would stop playing a title if they encountered multiple disruptive advertising elements.
Losing half of an audience at the very moment you are trying to engage them is hardly a winning strategy. However, advertising does not have to be synonymous with annoyance.
The same eMarketer survey revealed a more optimistic finding: one in five gamers indicated they would actually play a game more often if the in‑game ads were of high quality and seamlessly integrated. This suggests that, when executed properly, 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 steadily. In this environment, well‑crafted, non‑intrusive ads could find a receptive home. The logic behind offering an ads‑for‑games model is not new; it has already been proven in the realm of linear media.
Services such as Netflix, Disney+, and other streaming platforms have demonstrated that a tiered approach—offering both ad‑free and ad‑supported subscriptions—can generate significant revenue while expanding the audience base. If Xbox’s pilot proves successful, it could not only preserve its existing paying subscriber base but also unlock a brand‑new revenue stream that the company desperately needs. The importance of this development cannot be overstated. Console gaming is increasingly being positioned as a premium service.
Prices for new consoles, flagship games, accessories, and downloadable content (DLC) continue to rise, making it harder for the average consumer to justify the expense. This creates a barrier that keeps many potential players on the sidelines. Xbox itself has acknowledged that, when done correctly, advertising can lower the cost of access to gaming.
The mobile gaming sector already offers a clear precedent: ad‑supported tiers allow players to engage with games without paying large upfront fees, thereby widening the market. Crucially, Xbox’s model remains optional. Players who prefer an uninterrupted experience can continue to pay a subscription fee, while those who are willing to tolerate short advertisements can enjoy the same content at a reduced price.
This two‑tier system aims to retain loyal fans while simultaneously opening the door for newcomers who might otherwise be priced out. Although no formal survey data on Xbox’s latest announcement is available yet, it is reasonable to assume that a large majority of gamers would accept a 30‑second ad if it meant gaining an hour of gameplay in a beloved or new title. Happydemics’ own data, derived from 285 in‑game campaigns across the United Kingdom and North America, shows that in‑game advertising consistently outperforms traditional TV, social, and online ads in terms of recall and attribution. Players are more likely to remember an ad they saw while playing and to correctly associate it with the brand that delivered it.
Xbox’s “around‑the‑game” approach—advertisements displayed before the game launches rather than embedded within the gameplay—adds another layer of intrigue. Our research indicates that these pre‑game placements generate higher ad recall and better brand attribution than ads placed directly inside the game world.
While TV and social media ads can be memorable, they do not always translate into clear brand connections. Gaming, by contrast, appears to sit in a league of its own regarding these metrics, which explains why companies like Xbox and Electronic Arts (EA) are increasingly exploring ad‑based models.
It is essential to note that Xbox’s ads are pre‑game, not in‑game. In‑game ad formats tend to excel further down the funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability. A hybrid strategy that combines both pre‑game and in‑game ads could theoretically provide advertisers with the best of both worlds, but it also risks provoking greater resistance from players who are sensitive to interruptions. Xbox has pledged that its advertisements will be non‑intrusive.
By placing ads before the gameplay begins, the company aims to preserve the immersive experience that gamers value. This approach benefits both players—who avoid disruptions during play—and advertisers, who want their messages to be part of a seamless experience rather than a jarring interruption.
Relevance will be another key factor. No gamer wants to see an ad for cat food when they don’t own a cat, or an advertisement for a game they have already completed.
Contextual, targeted ads that align with a player’s interests will be essential to prevent users from abandoning the session at the first sign of irrelevant content. When done right, this relevance can provide brands with a powerful platform to reach new audiences while keeping players engaged.
Nevertheless, Xbox is venturing into largely uncharted territory. The company must gauge player reactions to pre‑game advertising and determine whether the revenue generated will be sufficient to sustain the model over the long term.
The move reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who appears willing to experiment with new monetisation strategies. Only time will reveal whether this gamble pays off. Historically, many gaming ad models have been based on a “watch an ad, earn an extra life” premise.
Xbox’s proposal differs: players would watch an ad to access a game they already own, rather than to earn a reward. Our existing data set does not yet indicate how this will be received, but broader research on ad format perception shows that descriptors such as “non‑intrusive” and “immersive” are consistently rated highly by respondents. If Xbox can deliver on these expectations, it will set a benchmark for future ad‑supported gaming initiatives. My forecast is that Xbox will neither be the first nor the last platform to test this approach.
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 creating a model that balances revenue generation with a respectful, optional ad experience, it could pave the way for other gaming companies to follow suit, ultimately making video games more affordable and accessible for everyday gamers worldwide.