Virginie Chesnais serves as chief marketing officer at the ad‑tech analytics firm Happydemics. For many years, gamers have viewed in‑game advertising with suspicion, and that wariness is understandable.
The reputation of ads in video games is mixed; players often encounter redirects to external sites, misleading content, or hard‑to‑find close buttons, all of which generate frustration. A recent eMarketers survey highlighted that 52 % of respondents would stop playing if they ran into multiple intrusive ad elements. Losing half of an audience at the moment you’re trying to engage them is clearly not a winning tactic. However, advertisements do not have to be detrimental.
The same study 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. With Xbox presently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, well‑crafted ads could find a receptive home within the medium.
The rationale for introducing an ad‑for‑games model is more compelling than many anticipate, as linear media has already demonstrated its viability. Platforms such as Netflix, Disney+ and other streaming services have proven that offering both ad‑free and ad‑supported tiers can generate substantial revenue while keeping a broad subscriber base. Should Xbox’s experiment succeed, it would not only preserve its paying customers but also unlock a fresh, previously untapped income stream—something the brand could certainly use right now.
This development matters because console gaming is increasingly positioning itself as a premium service. Prices for games, consoles, accessories, and downloadable content keep rising, making it harder for the average player to justify the expense. In effect, a financial barrier is emerging that limits participation for many potential gamers. Xbox itself has stated that, when executed correctly, advertising can lower the cost of accessing games.
The mobile‑gaming sector already offers a precedent: ad‑supported tiers enable players to engage with games without paying large upfront fees, thereby expanding the market. Crucially, the system would be optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those willing to view ads could enjoy a reduced‑price or free option. By providing a two‑tiered structure, Xbox hopes to retain its loyal fan base while simultaneously opening the door for newcomers. Although no specific survey data exists for this particular launch, it is reasonable to assume that most gamers would tolerate a brief 30‑second commercial if it granted them an hour of gameplay on a favorite or new title. Xbox likely has internal data supporting this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the UK and North America shows that in‑game advertisements consistently outperform 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 sponsoring brand.
Xbox’s “around‑the‑game” approach—displaying ads before the game starts rather than during gameplay—adds another layer of interest. Our data indicate that pre‑game placements achieve higher recall and attribution scores compared with ads embedded directly within the game world. This distinction is significant because, while we can often recall ads seen on television or social feeds, we do not always link them to the corresponding brands.
Gaming appears to excel in this metric, which may explain why companies such as Xbox and EA are increasingly exploring ad‑based models. It is important to note that Xbox’s ads will be pre‑game, not in‑game.
Traditional in‑game formats tend to perform better further down the conversion funnel, boosting brand image, consideration, interest, and likeability. A hybrid strategy that combines both pre‑game and in‑game ads could offer advertisers the best of both worlds, though it might also provoke greater resistance from players. Xbox has pledged that the advertisements will not be intrusive.
By placing ads before the gameplay begins, the company aims to preserve the immersive experience once the player is inside the virtual world. This consideration benefits both gamers, who avoid interruptions, and advertisers, who want their messages to be part of a seamless experience rather than a nuisance.
Relevance will be another key factor. Nobody wants to see a commercial for cat food when they don’t own a cat, or an ad for a game they have already completed. Contextual, targeted ads that make sense to the player will help prevent “ad fatigue” and keep viewers engaged, while also giving brands a high‑quality platform to reach new audiences. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to the presence of ads; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The move toward ad‑supported game streaming reflects a bold strategy by Xbox CEO Asha Sharma, who has shown a willingness to experiment and take calculated risks. Only time will reveal whether this approach delivers the desired outcomes. Historically, many gaming ad programs have relied on “watch an ad, earn an extra life” mechanics.
Xbox’s proposal is different: it asks players to view an ad in order to access a game they already own. Our existing data set does not yet indicate how this will be received.
Research on ad‑format perception, however, shows that when participants recall an ad, they often describe it as “non‑intrusive” and “immersive.” If Xbox and future adopters aim to make gaming ads successful, these two attributes will be essential metrics to monitor. My forecast is that Xbox will neither be the first nor the last platform to test such a model. Advertising within 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 companies to follow, while simultaneously making video games more affordable and accessible for everyday gamers.