Virginie Chesnais serves as chief marketing officer at Happydemics, an ad‑tech analytics firm. For years, many gamers have viewed in‑game advertising with suspicion, and that wariness is understandable. The reputation of ads in interactive entertainment is mixed at best; players often encounter redirects to unrelated sites or apps, misleading content, or dismiss buttons that are difficult to locate, leading to frustration.
A recent study by eMarketer revealed that 52 percent of respondents would abandon a game if they ran into multiple intrusive ad elements. Losing half of your audience the moment you try to engage them is hardly an effective strategy.
However, advertising does not have to be a negative experience. The same research indicated 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 currently piloting an ad‑supported game‑streaming service and the overall cost of playing continuing to climb, well‑crafted advertisements could find a receptive home within the gaming ecosystem. The argument for a hybrid "ads‑for‑games" model is more compelling than many anticipate, and it has already been demonstrated in linear media.
Services such as Netflix, Disney+, and other streaming platforms have shown that a steady revenue stream can be generated by offering both ad‑free and ad‑supported tiers. Should Xbox’s experiment prove successful, it would not only preserve its subscription base but also unlock a previously untapped source of income—a boon the brand desperately needs at this juncture.
This development matters because console gaming is increasingly positioned as a premium offering. Prices for games, consoles, accessories, and downloadable content have risen sharply, creating a financial barrier for the average player. Xbox itself has stated that, when executed correctly, advertising can lower the barrier to entry and make gaming more accessible.
Mobile gaming already provides a clear precedent: ad‑supported tiers allow players to engage with games without the need for large upfront purchases. By extending a similar model to console gaming, Xbox could open a new pathway for newcomers while preserving the experience for existing fans. The approach is optional. Players who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads.
By presenting a two‑tier system, Xbox aims to keep its loyal community satisfied while simultaneously inviting a broader audience to join. Although formal survey data on this particular launch is not yet available, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second commercial if it granted them an hour of gameplay on a beloved or new title. Xbox likely has internal data supporting this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America demonstrates that in‑game advertisements consistently out‑perform television, social media, and other online formats in terms of recall and attribution. Players are more likely to remember and correctly associate an ad they saw while gaming with the brand behind it.
Xbox’s "around‑the‑game" strategy—placing ads before the gameplay begins rather than embedding them within the game world—adds another layer of advantage. Our data show that these pre‑game placements generate higher recall and attribution scores compared with traditional in‑game placements. This distinction is crucial because, while we may recall ads seen on TV or scrolling through a feed, we do not always link them to the correct brand. Gaming appears to operate in a league of its own for this metric, which explains why companies like Xbox and EA are increasingly exploring ad‑based revenue models.
It is important to note that Xbox’s ads will be pre‑game, not in‑game. In‑game formats tend to excel further down the conversion funnel, boosting brand image, consideration, interest, and likability. A combined approach—leveraging both pre‑game and in‑game ads—could provide advertisers with a powerful toolkit, though it may also provoke additional pushback from players.
Xbox has pledged that the advertisements will not be intrusive. By delivering ads before the game starts, the company aims to preserve the immersive experience once gameplay begins.
This consideration benefits both the player, who enjoys an uninterrupted session, and the advertiser, who wants their message to complement rather than disrupt the experience. Relevance will be key. No gamer wants to see an ad for cat food when they don’t own a cat, or a promotion for a game they have already completed. Contextual, well‑targeted ads can keep players engaged and provide brands with a valuable channel to reach new audiences.
Nevertheless, Xbox is venturing into uncharted territory. The first unknown is how players will react to this new ad format; the second is whether the revenue generated will be sufficient to sustain the model long‑term. The move toward ad‑supported game streaming reflects a bold strategy by Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment and take calculated risks.
Only time will reveal whether this approach delivers the intended results. Historically, many gaming ad campaigns have relied on "watch an ad, earn an extra life" mechanics. Xbox’s proposal differs: players would watch an ad to access a game they already own. Our existing data set does not yet indicate how this model will be received.
Research on ad format perception shows that when respondents recall an ad, they often describe it as "non‑intrusive" and "immersive"—the two most popular positive descriptors. If Xbox, and potentially other platforms in the future, want to make gaming ads a success, these attributes will be essential metrics to monitor.
My forecast is that Xbox will neither be the first nor the last company to experiment with this strategy. Advertising in games has existed for years, but rarely with the player experience as the primary focus.
Should Xbox manage to strike the right balance, it could pave the way for similar initiatives across the industry and make video games more affordable and accessible for everyday gamers.