Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have viewed in‑game advertising with suspicion, and their concerns are not unfounded. The reputation of ads in video games is mixed; players often encounter redirects to unrelated sites or apps, misleading content, or dismiss buttons that are difficult to locate, all of which generate frustration. A recent study conducted by eMarketer highlighted that 52 % of gamers would stop playing if they ran into several intrusive 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 detrimental. The same research revealed that one in five gamers would actually increase the frequency with which they play a title if the in‑game ads were high‑quality and well‑integrated.
With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, there is a genuine opportunity for premium‑grade ads to find a natural home within the gaming ecosystem. The argument for a hybrid "ads‑for‑games" model is stronger 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 subscription‑only and ad‑supported tiers can generate substantial revenue while keeping a broad audience base. Should Xbox’s experiment prove viable, it could not only preserve its existing subscriber base but also unlock a completely new revenue stream—something the brand could certainly use at this juncture. The relevance of this development is underscored by the fact that console gaming is increasingly being positioned as a premium experience. Prices for games, consoles, accessories, and downloadable content have risen steadily, 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. Mobile gaming already provides a clear illustration: ad‑supported tiers allow players to try games without paying a large upfront fee, effectively lowering the entry threshold.
The same principle could be applied to console gaming, giving newcomers a way to enjoy titles without the need for a hefty initial investment. Crucially, this model would be entirely optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those willing to tolerate a brief advertisement could access the same content for free or at a reduced price. By offering a two‑tier system, Xbox aims to keep its loyal fan base satisfied while simultaneously expanding accessibility for a broader audience.
Although we lack concrete survey data on the latest Xbox announcement, 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 brand‑new title. Xbox’s internal analytics are likely to confirm this hypothesis. Data from Happydemics covering 285 in‑game campaigns across the United Kingdom and North America indicate 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—advertisements displayed before the game launches rather than embedded within the gameplay—becomes particularly compelling. Our research shows that pre‑game placements generate higher recall and attribution scores compared with ads that appear directly inside the game environment. The distinction matters because, while we can often remember ads we encounter on TV or while scrolling through feeds, we do not always link those impressions to the correct brands.
Gaming appears to operate in a league of its own when it comes to brand‑memory metrics, which likely explains why companies such as Xbox and EA are increasingly exploring ad‑based models. It is important to note that Xbox’s ads will be pre‑game, not intragame. In‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability. A blended approach—combining pre‑game and in‑game ads—could theoretically offer the best of both worlds for advertisers, though it may also provoke greater resistance from players who are sensitive to interruptions.
Xbox has pledged that the advertisements will be non‑intrusive. By placing ads before the gaming session begins, the company aims to preserve the immersive experience once gameplay starts. This approach benefits both the player, who enjoys an uninterrupted session, and the advertiser, whose message is delivered without jeopardizing the user’s enjoyment. Relevance will be key.
No gamer wants to see a promotion for cat food when they have no feline companion, nor do they appreciate ads for games they have already completed. Contextual, well‑targeted ads can keep players engaged rather than prompting them to quit the session, while simultaneously giving brands an effective platform to reach fresh audiences.
Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how players will react to a new ad format; 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 innovative ideas.
Only time will reveal whether this strategy delivers the intended outcomes. Historically, our work in gaming advertising has centered on "watch an ad, earn an extra life" mechanics. Xbox’s proposal differs: players would watch an ad to gain access to a game they already own, rather than to earn a reward. Our existing data set does not yet indicate how this will be received.
However, broader research on ad‑format perception shows that participants who recall an ad often describe it as "non‑intrusive" and "immersive"—the two most frequently cited positive attributes. If Xbox and future industry players want to make gaming ads a lasting success, these two qualities will need to be carefully monitored and optimized. My forecast is that Xbox will neither be the first nor the last platform to trial such a model.
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 other gaming companies to adopt similar strategies, ultimately making video games more affordable and accessible for everyday gamers.