Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and that wariness is understandable. The reputation of ads in video games is mixed at best; players frequently encounter redirects to unrelated websites or apps, misleading content, or closing buttons that are difficult to locate, all of which generate frustration. A recent study conducted by eMarketer highlighted that 52 percent of gamers would abandon a session if they ran into several intrusive advertising 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 nuisance. The same research 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.
This suggests that, when executed correctly, ads can become a value‑adding feature rather than a deterrent. Xbox is currently piloting an ad‑supported game‑streaming service at a time when the overall cost of playing is climbing steadily. In this environment, well‑crafted ads could find a welcoming niche within the gaming ecosystem.
The argument for a modest advertising model in games is more compelling than many anticipate, and it has already been demonstrated in the world of linear media. Services such as Netflix, Disney+, and other streaming platforms have proven that a hybrid model—offering both ad‑free subscriptions and lower‑cost, ad‑supported tiers—can generate substantial revenue while expanding the audience base. If Xbox’s experiment succeeds, the company would not only preserve its paying subscriber base but also unlock an entirely new, previously untapped source of income—a development that could prove vital as the brand seeks fresh growth avenues. This is significant because console gaming is increasingly being positioned as a premium experience.
The price tags attached to games, consoles, accessories, and downloadable content are rising, 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 stated that, when handled properly, advertising can lower the cost of entry to gaming. Mobile gaming has already shown that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases.
By offering a free or low‑cost option that includes short advertisements, Xbox can attract newcomers while still preserving a premium, ad‑free path for those who prefer it. It is crucial to note that participation would be entirely optional.
Players who dislike watching ads could simply maintain a paid subscription, while those who are price‑sensitive could opt into the ad‑supported tier. This two‑track system aims to keep loyal fans happy while simultaneously broadening the market to include budget‑conscious gamers. Although concrete survey data on this specific launch are not yet available, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second commercial if it meant gaining an hour of gameplay on a beloved or newly released title.
Xbox likely has internal data that supports this hypothesis. Happydemics analyzed 285 in‑game campaigns across the United Kingdom and North America and found that in‑game advertisements consistently outperformed TV, social, and other online formats in terms of recall and attribution.
Players were more likely to remember the brand behind an in‑game ad and correctly associate it with the product being promoted. The distinction between “around‑the‑game” ads—those displayed before a session begins—and ads that appear within the gameplay itself is also noteworthy. Our research indicates that pre‑game placements generate stronger ad recall and attribution compared with intrinsic in‑game spots.
This matters because while traditional media can be remembered, the link to the sponsoring brand is often weak. Gaming, by contrast, appears to forge a stronger connection between the ad and the brand, which may explain why companies like Xbox and EA are increasingly exploring ad‑based revenue models. It is important to clarify that Xbox’s initial plan focuses on pre‑game advertising rather than intrusive in‑game pop‑ups. In‑game formats tend to excel later in the marketing funnel, boosting brand image, consideration, interest, and likeability.
A combined approach—leveraging both pre‑game and in‑game ads—could deliver the best of both worlds for advertisers, though it might also provoke greater resistance from players. Xbox has emphasized that the ads will be non‑intrusive.
By placing commercials before the actual gameplay, the company aims to preserve the immersive experience that gamers value. This approach benefits both the player, who enjoys uninterrupted play, and the advertiser, whose message is delivered in a context that feels less disruptive.
Relevance will be key. No gamer wants to see an advertisement for cat food when they don’t own a cat, or a promotion for a game they have already completed.
By ensuring that ads are contextually appropriate and provide a clear rationale for being shown, Xbox can minimize the risk of users abandoning the session while offering brands a highly targeted platform. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to a model that asks them to watch ads in exchange for access to games they already own. The second unknown is whether the revenue generated will be sufficient to sustain the model over the long term. The decision to explore ad‑supported streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with new business models. Only time will reveal whether this strategy delivers the intended results.
Historically, many gaming ad campaigns have relied on a “watch an ad, earn an extra life” mechanic. Xbox’s proposal differs: it asks players to view an ad simply to launch a game they already possess.
Our existing data set does not yet indicate how this will be received. Research on ad‑format perception shows that when respondents are asked to describe ads they remember, terms such as “non‑intrusive” and “immersive” rank among the most positive descriptors. Should Xbox—and potentially other platforms—seek 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 company to test this kind of approach.
Advertising in games has existed for years, but it has often been implemented without the player’s experience as a priority. If Xbox can strike the right balance, it could pave the way for similar initiatives across the industry, ultimately making video games more affordable and accessible for everyday gamers.