Virginie Chesnais serves as the chief marketing officer at Happydemics, a platform that specializes in ad‑tech analytics. For many years, gamers have approached in‑game advertising with skepticism, 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 websites or apps, misleading content, and poorly designed close buttons that are difficult to locate.
A recent study conducted by eMarketer highlighted that 52 percent of players would abandon a game after encountering several intrusive ad elements. Losing half of your audience at the moment you’re trying to engage them is hardly an effective strategy.
However, advertisements do not have to be a negative experience. The same survey revealed that one in five gamers would actually increase the frequency with which they play a title if the in‑game ads were of a high caliber. This suggests that quality matters more than the mere presence of ads.
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 home within the gaming ecosystem. The argument for integrating an ad‑for‑games model is more compelling than many anticipate, and it is already partially validated by the success of linear media.
Streaming giants such as Netflix and Disney have demonstrated that offering an ad‑supported tier can generate substantial revenue while still delivering a reliable service. Should Xbox’s experiment prove profitable, it would not only preserve its subscription‑based revenue stream but also unlock a fresh, previously untapped source of income—precisely the kind of financial boost the brand needs right now. This development is significant because console gaming is increasingly positioning itself as a premium offering. Prices for games, consoles, accessories, and downloadable content have risen steadily, creating a financial barrier for the average player.
Xbox itself has noted that, when executed correctly, advertising can lower the cost of entry to gaming. The mobile gaming sector already illustrates how ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases. It is also crucial to remember that any advertising model would be optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads. By presenting a two‑tier system, Xbox aims to keep its dedicated fan base satisfied while simultaneously making games more approachable for newcomers. Although concrete survey data on this specific rollout is not yet available, it is reasonable to assume that the majority of gamers would tolerate a 30‑second commercial 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 shows that in‑game advertisements consistently out‑perform television, social, and online ads when it comes to 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 brand that displayed it. Xbox’s “around‑the‑game” approach—placing ads outside the actual gameplay, such as before the game launches—adds another layer to this picture.
Our research indicates that these pre‑game formats enjoy a clear advantage in ad recall and attribution compared with ads embedded directly within the game environment. Why does this matter?
While we can often recall ads that appear on TV or within social feeds, that memory does not always translate into a clear brand connection. Gaming appears to operate in a league of its own for this metric, which may explain why companies like Xbox and EA are increasingly exploring ad‑based models.
It is essential to differentiate between pre‑game and in‑game advertising. In‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability.
A hybrid strategy that blends both pre‑game and in‑game ads could theoretically offer advertisers the best of both worlds, though it also risks provoking greater pushback from players. Xbox has pledged that its ads will not be intrusive. By confining advertisements to the moments before gameplay begins, the company hopes to preserve the immersive experience that gamers cherish. This approach benefits both players—who avoid interruptions during play—and advertisers, who want their messages to integrate seamlessly rather than disrupt the session.
Relevance will be a key factor. No gamer 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 keep audiences engaged and prevent them from abandoning the experience at the first sign of irrelevant content. Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how players will react to a new ad paradigm; the second is whether the revenue generated will be sufficient to sustain the model over the long term.
The decision to explore ad‑supported streaming reflects the boldness of Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment and take calculated risks. Only time will reveal whether this gamble pays off.
Historically, many gaming ad initiatives have taken the form of “watch an ad, earn an extra life” incentives. Xbox’s proposal is different: it asks players to watch an advertisement in order to access a game they already own. Our existing data set does not yet indicate how this model will be received. Nonetheless, research on ad format perception shows that when participants are asked to describe ads they remember, terms like “non‑intrusive” and “immersive” consistently rank among the most favorable.
If Xbox—and potentially other platforms in the future—aim to make gaming ads successful, these two attributes will be critical metrics to monitor. My forecast is that Xbox will neither be the first nor the last company to experiment with this approach. Advertising within games has existed for years, but it has rarely been designed with the player’s experience as the primary focus. Should Xbox manage to strike the right balance, it could pave the way for similar strategies across the industry, ultimately making video games more affordable and accessible for the everyday gamer.