Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have been skeptical of advertisements that appear within games, and their concerns are not unfounded.
In‑game ads often suffer from a poor reputation because they can redirect users to unrelated websites or apps, present misleading content, or feature obscure close buttons that frustrate players. A recent study conducted by eMarketer revealed that 52 % of respondents would abandon a game after encountering several disruptive ad elements. Losing half of the audience at the very moment you are trying to engage them is hardly an effective approach. However, advertising does not have to be a negative experience.
The same research indicated 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 presently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, well‑crafted ads could find a welcoming environment within the console ecosystem. The argument for a hybrid "ads‑for‑games" model is more compelling than many anticipate, especially when we look at the success of linear media. Platforms such as Netflix, Disney+, and other streaming services have demonstrated that offering an ad‑supported tier can generate substantial revenue while still delivering a reliable service.
Should Xbox’s experiment prove viable, it would not only preserve its subscription‑based revenue but also unlock a completely new, previously untapped income stream—a development the brand could greatly benefit from at this stage. This issue is significant because console gaming is increasingly being positioned as a premium product.
Prices for games, consoles, accessories, and downloadable content keep rising, making it harder for the average consumer to justify the expense. This creates a barrier that prevents many potential players from entering the market. Xbox itself has stated that, when executed correctly, advertising can lower the cost of accessing games.
The mobile‑gaming sector already provides evidence that ad‑supported tiers can serve as an entry point for players who are unwilling or unable to pay large upfront fees. Crucially, the model remains optional. Players who prefer an ad‑free experience can continue to pay a subscription fee, while those who are comfortable with occasional ads can enjoy a reduced‑price option. By offering a two‑tier system, Xbox hopes to keep its loyal fan base satisfied while simultaneously expanding accessibility for newcomers.
Although there is no concrete survey data on this specific announcement yet, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second commercial if it meant gaining an hour of playtime on a favorite or newly released title. Xbox’s internal data likely supports this hypothesis. Happydemics has analyzed 285 in‑game campaigns across the United Kingdom and North America, finding 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 see while gaming and correctly associate it with the sponsoring brand. This is where Xbox’s "around‑the‑game" strategy—advertisements displayed before the game launches rather than embedded within the gameplay—becomes intriguing. Our research indicates that pre‑game placements generate higher recall and attribution scores compared with intrinsic in‑game spots. The distinction matters because, while we can often recall ads seen on TV or scrolling through feeds, we do not always link those impressions to specific brands.
Gaming appears to occupy a unique position in this respect, which likely explains why companies such as Xbox and Electronic Arts are increasingly exploring ad‑based revenue models. It is important to note that Xbox’s ads are not in‑game but pre‑game.
Traditional in‑game formats tend to excel further down the marketing funnel, delivering stronger brand‑image uplift, consideration, interest, and likeability. A combination of both pre‑game and in‑game ads could theoretically provide the best of both worlds for advertisers, though it might also provoke greater resistance from players. Xbox has pledged that the ads will be non‑intrusive.
By placing commercials before the actual gameplay begins, the company aims to avoid breaking immersion. This approach benefits both the player—who enjoys an uninterrupted experience—and the advertiser, who wants their message to be part of the overall journey rather than a disruptive interruption. Relevance will be key.
No gamer wants to see an advertisement for cat food when they have no feline companion, or a promotion for a game they have already completed. By ensuring that ads are contextually appropriate and provide a clear rationale for their display, Xbox can keep players from abandoning the session while delivering brands a highly effective platform for reaching fresh audiences. Nonetheless, Xbox is venturing into largely uncharted territory.
The first uncertainty concerns how gamers will react to the presence of ads, and the second revolves around 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 gamble pays off.
Historically, many of our 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. Our existing data set does not yet indicate how this will be received.
Related research on ad‑format perception shows that when participants are asked to describe the format using positive adjectives, "non‑intrusive" and "immersive" consistently rank among the top descriptors. If Xbox—and potentially other platforms in the future—aim 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 to trial such a strategy. 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, ultimately making video games more affordable and accessible for the everyday gamer.