Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform that specializes in ad‑technology. For many years, gamers have been skeptical of advertisements that appear within games, and that distrust is not unfounded. In‑game ads have earned a mixed reputation because they often redirect users to unrelated websites or apps, feature misleading content, or hide the close button in a way that makes it nearly impossible to dismiss.
A recent study conducted by eMarketer highlighted that 52 % of players would abandon a session if they encountered several intrusive ad elements. Losing half of your audience at the moment you are trying to engage them is hardly an effective strategy.
Nevertheless, advertisements do not have to be synonymous with annoyance. The same eMarketer survey revealed that one in five gamers would actually increase the frequency with which they play a title if the ads presented were of high quality and relevance. This insight is especially pertinent now that Xbox is piloting an ad‑supported game‑streaming service while the overall cost of gaming continues to climb. Well‑crafted, non‑intrusive ads could therefore find a welcoming niche within the gaming ecosystem.
The argument for incorporating a modest ad‑based revenue model into gaming is more compelling than many industry observers assume, and it has already been demonstrated in the world of linear media. Services such as Netflix, Disney+ and other video platforms have proven that offering a tier with advertisements can generate substantial income while still delivering a reliable service.
Should Xbox’s experiment succeed, the company would not only preserve its subscription‑based revenue but also unlock an entirely new, previously untapped stream of earnings—a development that would be especially valuable at a time when the brand is seeking fresh sources of cash. This issue matters because console gaming is increasingly positioned as a premium product. The price tags attached to new consoles, blockbuster titles, accessories, and downloadable content are steadily rising, creating a financial barrier for the average player.
Xbox itself has stated that, when executed correctly, advertising can lower the cost of entry to gaming. The mobile‑gaming sector already illustrates how ad‑supported tiers can provide a gateway for users who are unwilling or unable to make a large upfront purchase. Importantly, any ad model Xbox introduces would be 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 even free access. By offering a two‑tier system, Xbox hopes to retain its loyal fan base while simultaneously expanding accessibility for newcomers. Although no formal survey data on this specific announcement is yet available, it is reasonable to assume that a large majority of gamers would tolerate a brief 30‑second advertisement if it meant gaining an hour of playtime on a beloved or new title.
Xbox’s internal analytics are likely to confirm this hypothesis. Data from Happydemics, covering 285 in‑game campaigns across the United Kingdom and North America, consistently show that advertisements embedded within games outperform traditional TV, social, and online placements when it comes to ad recall and attribution.
In other words, gamers are more likely to remember an ad they saw while playing and to correctly associate it with the brand that displayed it. This is where Xbox’s “around‑the‑game” approach becomes particularly interesting. The company plans to place ads outside the actual gameplay—such as pre‑game videos—rather than embedding them directly into the game world. Our research indicates that these peripheral formats deliver a clear advantage in terms of recall and attribution compared with intrinsic in‑game placements.
The distinction matters because, while we can often remember a commercial that aired on television or a banner that appeared on a social feed, we do not always link that memory to the sponsoring brand. Gaming appears to be in a league of its own for this metric, which likely explains why Xbox and other publishers like EA are increasingly exploring ad‑based revenue models. It is essential to note that Xbox’s ads will not interrupt the gameplay itself; they will appear before the game starts. 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 strategy that combines pre‑game and in‑game ads could, in theory, offer the best of both worlds for advertisers, but it also risks provoking greater pushback from players who value an uninterrupted experience. Xbox has pledged that the advertisements will be non‑intrusive. By delivering ads prior to the start of a session, the company aims to preserve the immersive quality of the game. This approach benefits both the player—who can enjoy an uninterrupted session—and the advertiser, who wants their message to be part of the experience rather than a disruption.
Relevance will be a key factor for success. No gamer wants to see a commercial for cat food when they do not own a cat, or an ad for a game they have already completed. By ensuring that ads are contextually appropriate and provide a clear rationale for their placement, Xbox can minimize the risk of players abandoning the session at the sight of an irrelevant spot, while giving brands a highly engaged audience. Nonetheless, Xbox is navigating largely uncharted waters.
The first unknown is how players will react to a new ad model; the second is whether the revenue generated will be sufficient to sustain the approach over the long term. The move toward ad‑supported 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 this strategy delivers the intended results. Historically, many of our gaming‑ad projects have relied on a “watch an ad, earn an extra life” mechanic.
Xbox’s proposal differs: players would watch an ad to gain access to a game they already own, rather than earning a supplemental benefit. Our existing data set does not yet indicate how this will be received. However, broader research on ad‑format perception suggests that when participants are asked to describe the most appealing qualities of an advertisement, terms like “non‑intrusive” and “immersive” consistently rank near the top. If Xbox—and potentially other platforms in the future—aim to make advertising a permanent fixture in gaming, these two attributes will be crucial performance indicators.
My forecast is that Xbox will neither be the first nor the last company to test such a model. Advertising has been part of gaming for years, but it has rarely been designed with the player’s experience at the forefront. Should Xbox succeed in delivering a balanced, player‑friendly ad ecosystem, it could pave the way for other publishers to follow suit, ultimately making video games more affordable and accessible for everyday gamers.