Virginie Chesnais serves as the chief marketing officer at Happydemics, a platform that specializes in ad‑tech analytics. For many years, gamers have been skeptical of advertisements that appear within video games, and their concerns are not unfounded.
The reputation of in‑game ads is mixed at best, often marred by intrusive redirects to external sites, misleading content, or hide‑away close buttons that frustrate users. A recent study conducted by eMarketer highlighted that 52 percent of players would abandon a session if they encountered several disruptive ad elements. Losing half of an audience at the moment you are trying to engage them is hardly an effective approach. However, advertisements do 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 ads were of high quality and well integrated. Xbox is currently piloting an ad‑supported game‑streaming service at a time when the overall cost of playing is on an upward trajectory. In this environment, well‑crafted ads could find a receptive home within the gaming ecosystem. The argument for incorporating a modest ad‑based revenue model is more compelling than many anticipate, especially when we look at the success of linear media platforms.
Services such as Netflix, Disney+, and other streaming giants have demonstrated that offering both ad‑free and ad‑supported tiers can generate substantial income while preserving a consistent user experience. Should Xbox’s experiment prove viable, it would not only safeguard its subscription base but also unlock an entirely new, previously untapped stream of revenue—something the brand could certainly use. The relevance of this development is underscored by the fact that console gaming is increasingly positioned as a premium offering.
Prices for games, consoles, accessories, and downloadable content continue to climb, creating a financial hurdle for the average enthusiast. Xbox itself has acknowledged that, when executed correctly, advertising can lower the barrier to entry and make gaming more affordable. Mobile gaming already offers a precedent: ad‑supported tiers enable players to enjoy titles without committing to large upfront payments, thereby expanding the overall market. Importantly, participation would remain optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads. By presenting a two‑tier model, Xbox aims to keep its loyal fan base satisfied while simultaneously opening the door for newcomers who might otherwise be deterred by cost. Although no concrete survey data exists yet regarding this specific rollout, it is reasonable to assume that a majority of gamers would tolerate a 30‑second commercial if it granted them an hour of playtime on a favorite or brand‑new title. Xbox likely has internal data supporting this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows 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 correctly associate it with the sponsoring brand. This is where Xbox’s "around‑the‑game" strategy—showing ads before the game launches rather than embedding them within the gameplay—becomes intriguing. Our data indicate that pre‑game placements enjoy a clear advantage in recall and attribution when compared with intrinsic in‑game spots.
While traditional TV or social ads may be memorable, they do not always translate into a strong brand link. Gaming, by contrast, appears to sit in a league of its own for these metrics, which explains why companies like Xbox and EA are increasingly exploring ad‑based models. It is crucial to note that Xbox’s advertisements will not interrupt the actual gameplay; they will appear in the pre‑game lobby. In‑game ad formats tend to excel further down the conversion funnel, delivering higher lifts in brand image, consideration, interest, and likeability.
A hybrid approach—combining pre‑game and in‑game ads—could theoretically offer advertisers the best of both worlds, though it also risks greater pushback from players who value an uninterrupted experience. Xbox has promised that the ads will be non‑intrusive.
By placing them before the game starts, they avoid breaking immersion, a factor that matters to both gamers and advertisers. Advertisers want their messages to complement the experience, not to become a nuisance. Relevance will also be key. No one 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.
Contextual, well‑targeted ads can keep players engaged and give brands a valuable platform to reach new audiences without prompting users to abandon the session. Nonetheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to this new format; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The move toward ad‑supported game streaming reflects a bold, risk‑taking attitude from Xbox CEO Asha Sharma, who appears willing to experiment with innovative monetisation strategies.
Only time will reveal whether the gamble pays off. Historically, many gaming ad campaigns have relied on "watch an ad, get an extra life" mechanics. Xbox’s proposal is different: it asks players to watch a commercial to access a game they already own.
Our existing data set does not yet show how this will be received. Research on ad‑format perception suggests that when participants recall an ad, they tend to describe it as "non‑intrusive" and "immersive"—the two most popular positive descriptors.
If Xbox and future adopters wish to make gaming ads successful, they will need to focus closely on these attributes. My forecast is that Xbox will neither be the first nor the last platform to trial such a strategy.
Advertising within games has existed for years, but seldom with the player experience as the primary focus. Should Xbox manage to strike the right balance, it could pave the way for other companies to follow, ultimately making video games more accessible to everyday players and diversifying revenue streams for the industry.