Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform focused on advertising technology. For years, many gamers have viewed in‑game advertising with suspicion, and their concerns are understandable.
The reputation of ads in video games is mixed at best, often plagued by issues such as redirects to unrelated sites or apps, misleading content, and hard‑to‑find close buttons that frustrate users. 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 an audience at the moment you’re trying to engage them is hardly an effective tactic. However, advertising does not have to be a negative experience. The same research revealed that one in five gamers would actually increase the frequency with which they play a title if the in‑game advertisements were of high quality and relevance.
This insight arrives at a time when Xbox is piloting a new ad‑supported game‑streaming service, and when the overall expense of gaming continues to climb. Well‑crafted ads could therefore find a receptive home within the gaming ecosystem.
The argument for incorporating a modest advertising component into gaming services is stronger than many assume, and it has already been demonstrated in linear media. Services such as Netflix, Disney+ and other streaming platforms have shown 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 subscribers but also unlock a fresh, previously untapped source of income—a crucial development for a brand that is currently seeking additional financial streams.
The relevance of this approach is underscored by the fact that console gaming is increasingly positioned as a premium offering. Prices for games, consoles, peripherals and downloadable content keep rising, making it more difficult for the average consumer to justify the expense and creating a barrier for casual or budget‑conscious gamers.
Xbox itself has stated that, when executed correctly, advertising can lower the cost of entry to gaming experiences. Mobile gaming already provides a clear example: ad‑supported tiers allow players to engage with titles without paying large upfront fees, opening the market to a wider audience.
Importantly, any advertising model would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those willing to tolerate brief commercial breaks could access the same content for free or at a reduced price. By offering a two‑tier system, Xbox hopes to keep its dedicated fan base happy while simultaneously making games more approachable for newcomers. Although there is no concrete survey data on this specific rollout yet, it is reasonable to assume that a large majority of gamers would accept a 30‑second advertisement if it meant gaining an hour of playtime on a beloved or brand‑new title.
Xbox’s internal research likely supports this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America demonstrates that in‑game advertisements consistently outperform television, social media and other online formats in terms of recall and attribution.
In other words, players are more likely to remember an ad they see while gaming and to correctly associate it with the sponsoring brand. This is where Xbox’s “around‑the‑game” strategy—ads that appear before the gameplay begins rather than embedded within the experience—becomes intriguing.
Our data indicate that these pre‑game placements generate higher recall and stronger brand attribution compared with ads that appear directly inside the game world. The distinction matters because, while we may notice ads while watching TV or scrolling through feeds, we do not always link those impressions to the advertised brands. Gaming appears to occupy a unique position in the advertising landscape, delivering stronger brand‑memory metrics.
This advantage likely explains why companies like Xbox and EA are increasingly exploring ad‑based revenue models. It is essential to note that Xbox’s ads are planned to be pre‑game rather than in‑game. Traditional in‑game formats tend to excel later in the conversion funnel, boosting brand image, consideration, interest and overall likability. A hybrid approach—combining pre‑game and in‑game ads—could theoretically provide the best of both worlds for advertisers, though it might also provoke greater pushback from players who value uninterrupted immersion.
Xbox has emphasized that any advertisements will be non‑intrusive. By placing commercials before the game starts, the company aims to preserve the immersive experience once gameplay begins. This consideration is vital not only for player satisfaction but also for advertisers, who want their messages to enhance rather than disrupt the user journey.
Relevance will be another key factor. Players are unlikely to appreciate ads for cat food if they don’t own a cat, or promotions for games they have already completed.
Contextual, targeted advertising that aligns with a player’s interests will help prevent negative reactions and provide brands with a high‑impact platform to reach new audiences. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how gamers will react to a regular stream of pre‑game commercials; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The decision to explore ad‑supported game 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 gamble pays off. Historically, many gaming ad campaigns have relied on “watch an ad, earn an extra life” mechanics.
Xbox’s proposal, however, asks players to view an ad simply to access a game they already own—a different proposition that our existing data set does not yet address. 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 favorable.
If Xbox, and potentially other platforms in the future, hope to make gaming ads successful, they will need to focus closely on these two dimensions. My forecast is that Xbox will neither be the first nor the last company to trial this kind of approach. Advertising in 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 similar initiatives across the industry and, more importantly, make video games considerably more accessible to everyday gamers.