Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have approached in‑game advertising with suspicion, and that wariness is understandable. The reputation of ads in video games is mixed at best; players often encounter redirects to unrelated sites or apps, misleading content, or dismissible close buttons that are difficult to locate, leading to frustration. A recent study conducted by eMarketer highlighted that 52 % of gamers would abandon a session if they ran into several disruptive advertising elements.
Losing half of your audience at the moment you’re trying to engage them is hardly a winning tactic. Nevertheless, 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.
With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming climbing steadily, well‑crafted ads could find a receptive home within the ecosystem. The argument for integrating a form of ad‑for‑games model is more compelling than many assume, especially when we look at the success of linear media. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that a dual‑tier approach—offering both ad‑free and ad‑supported subscriptions—can generate substantial revenue while expanding the audience.
Should Xbox’s experiment succeed, it would not only preserve its paying subscriber base but also unlock a fresh, previously untapped revenue stream at a moment when the brand is seeking new financial footholds. This is significant because console gaming is increasingly being positioned as a premium offering. The price tags attached to games, consoles, accessories, and downloadable content continue to rise, making it harder for the average consumer to justify the expense and erecting a barrier for casual gamers. Xbox itself has stated that, when executed correctly, advertising can lower the cost of entry to gaming.
The mobile‑gaming sector already shows that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases. Importantly, any advertising model would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads. By offering a two‑tier system, Xbox aims to keep its loyal fanbase happy while simultaneously making games more approachable for newcomers.
Although there is no concrete survey data on the current announcement, it is reasonable to assume that most gamers would tolerate a 30‑second advertisement if it granted them an hour of gameplay on a favorite or new title. Xbox likely has internal data that supports this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America indicates that in‑game advertisements consistently outperform television, social media, and other online formats in terms of ad recall and attribution. In other words, gamers are more likely to remember an ad they see while playing and correctly associate it with the brand that delivered it. This is where Xbox’s “around‑the‑game” strategy—ads displayed before the game launches rather than embedded within the gameplay—becomes intriguing.
Our data suggest that pre‑game placements achieve a clear advantage in recall and attribution compared with intrinsic in‑game spots. The distinction matters because, while we may remember ads that appear on TV or while scrolling through feeds, those impressions do not always translate into a clear brand link.
Gaming appears to sit in a league of its own for this metric, which may explain why companies like Xbox and Electronic Arts are increasingly exploring ad‑based models. It is crucial to note that Xbox’s ads would be pre‑game, not in‑game. Traditional in‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likeability.
A hybrid approach that combines both 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. Xbox has promised that the advertisements will be non‑intrusive. By placing ads before the gameplay begins, the company aims to preserve the immersive experience that gamers value. This consideration benefits both the player, who avoids interruptions during play, and the advertiser, who wants their message to be part of a seamless experience rather than a disruptive annoyance.
Relevance will be key. No one 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, targeted ads that make sense in the moment can keep players from abandoning the session while giving brands a high‑impact 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, and the second is whether the revenue generated will be sufficient to sustain the model over the long term. The move toward an ad‑supported streaming service reflects a bold strategy by Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment and take calculated risks. Whether this gamble pays off remains to be seen.
Historically, many gaming ad programs have relied on a “watch an ad, earn an extra life” mechanic. 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 will be received. However, broader research on ad‑format perception shows that when participants recall an ad, they often describe the format as “non‑intrusive” and “immersive.” If Xbox—and potentially other platforms in the future—are 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 such a model. Advertising within games has existed for years, but rarely with the player’s 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 considerably more accessible to the everyday consumer.