Virginie Chesnais serves as the chief marketing officer at Happydemics, an ad‑tech analytics firm. For many years, gamers have looked at in‑game advertising with suspicion, and their wariness is understandable. The reputation of ads within video games is mixed at best; players often encounter redirects to unrelated websites or apps, misleading content, or hidden close buttons that are difficult to locate, all of which breed frustration. A recent study by eMarketer highlighted that 52 % of gamers would abandon a session if they ran into several intrusive ad elements.
Losing half of an audience at the very moment you are trying to engage them is hardly an effective approach. However, advertisements do not have to be a negative experience.
The same research revealed that one in five gamers would actually increase the frequency with which they played a title if the in‑game ads were of a high standard. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, well‑crafted advertisements could find a receptive niche within the medium.
The rationale for incorporating a modest advertising component into gaming is more compelling than many anticipate, a notion that has already been validated in the world of linear media. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that offering an ad‑supported tier can generate substantial revenue while still delivering a reliable product. Should Xbox’s experiment succeed, it would not only preserve its existing subscriber base but also unlock a previously untapped source of income at a moment when the company could use it most.
The significance of this development lies in the fact that console gaming is increasingly being positioned as a premium offering. Prices for games, consoles, accessories, and downloadable content have risen steadily, making it harder for the average consumer to justify the expense and erecting a barrier for casual players.
Xbox itself has stated that, when executed correctly, advertising can help lower the price of entry into gaming. Mobile gaming already provides a clear example: ad‑supported tiers enable players to engage with titles without having to make large upfront purchases, thereby widening the market.
Importantly, any advertising model Xbox adopts would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those who are comfortable with occasional ads could enjoy a reduced cost. By offering a two‑tier system, Xbox aims to retain its loyal fan base while simultaneously making games more approachable for newcomers. Although there is currently no publicly available survey data on this specific announcement, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second commercial if it meant they could play a favorite or brand‑new title for an hour.
Xbox likely has internal data supporting this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertisements consistently outperform television, social media, and other online formats when it comes to ad recall and attribution. In other words, players are more likely to remember an ad they saw while gaming and correctly associate it with the sponsoring brand. This is where Xbox’s “around‑the‑game” approach—ads displayed before the gameplay begins rather than embedded within the experience—becomes intriguing.
Our data indicate that pre‑game placements have a clear advantage in terms of recall and attribution when compared with ads that appear directly inside the game world. While traditional in‑game ads can excel further down the conversion funnel—boosting brand image, consideration, interest, and likability—the pre‑game format avoids disrupting immersion, which is a key concern for both players and advertisers.
Xbox has pledged that its ads will not be intrusive. By serving commercials before the game loads, the company hopes to preserve the immersive nature of the session. Relevance will also be crucial; nobody wants to see an advertisement for cat food when they don’t own a cat, or for a game they have already completed.
Contextual, targeted ads that make sense for the individual player will help prevent negative reactions and give brands a powerful channel to reach new audiences. Nevertheless, Xbox is venturing into largely uncharted territory. It remains to be seen how gamers will respond to this model and whether the revenue generated will justify a long‑term commitment to ad‑supported streaming. The move reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who appears willing to experiment with new monetisation strategies.
Historically, many gaming ad models have been based on “watch an ad, earn an extra life” mechanics. Xbox’s proposal is different: it asks players to watch an ad in order to access a game they already own. Our existing data set does not yet reveal how this particular trade‑off will be perceived. Related research on ad‑format perception shows that when respondents recall an advertisement, they frequently describe the experience as “non‑intrusive” and “immersive.” If Xbox—and potentially other platforms in the future—aim to make advertising a sustainable part of gaming, these two 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 approach. Advertising has been part of gaming for a long time, but it has not always been designed with the player’s experience at the forefront. Should Xbox manage to strike the right balance, it could pave the way for similar initiatives across the industry and, more importantly, make video games more affordable and accessible for everyday gamers.