Virginie Chesnais serves as chief marketing officer at the ad‑tech analytics firm Happydemics. 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 close buttons that are hard to locate, all of which generate frustration.
A recent study by eMarketers highlighted that 52 percent of gamers would abandon a session if they ran into multiple disruptive ad elements. Losing half of an audience at the moment you are trying to engage them is hardly an effective strategy. However, ads do not have to be a nuisance.
The same research indicated that one in five players would actually increase the frequency with which they play a title if the in‑game advertisements were of high quality and relevance. Xbox is currently piloting an ad‑supported game‑streaming service at a time when the overall cost of playing is climbing steadily. In this context, well‑crafted advertisements could find a natural home within the gaming ecosystem. The argument for a hybrid "ads‑for‑games" model is stronger than many assume, and it has already been demonstrated in the world of linear media.
Services such as Netflix, Disney+, and other streaming platforms have shown that offering both ad‑free and ad‑supported tiers can generate substantial revenue while keeping a broad subscriber base. If Xbox’s experiment proves successful, it could not only preserve its paying subscribers but also unlock a brand‑new revenue stream—something the company could greatly benefit from right now. The relevance of this approach is amplified by the fact that console gaming is increasingly being positioned as a premium experience. Prices for games, consoles, accessories, and downloadable content continue to rise, making it harder for the average consumer to justify the expense.
Xbox itself has stated that, when executed correctly, advertising can help lower the barrier to entry for gaming. The mobile‑gaming sector already offers a clear precedent: ad‑supported tiers allow players to access games without paying large upfront fees, expanding the market and driving engagement. Crucially, any advertising model Xbox adopts will be optional. Players who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads.
By providing a two‑tier system—ad‑supported and ad‑free—Xbox hopes to retain its loyal fan base while simultaneously inviting newcomers who might be deterred by high costs. Although no specific survey data on Xbox’s latest announcement is yet available, it is reasonable to assume that most gamers would tolerate a short 30‑second commercial if it meant gaining an hour of playtime in a beloved or new title.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America demonstrates that in‑game advertisements consistently out‑perform TV, social, and online ads when it comes to recall and attribution. Players are more likely to remember an ad they see while playing and correctly associate it with the brand that served it.
Xbox’s “around‑the‑game” strategy—showing ads before a session begins rather than embedding them within the gameplay—adds another layer of appeal. Our data indicate that pre‑game placements achieve higher recall and attribution scores compared with ads that appear directly inside the game world. This distinction matters because, while we might recall a commercial seen on television or scrolling through a feed, we do not always link that memory to the sponsoring brand.
Gaming, however, appears to operate in its own league for this metric, which likely explains why companies such as EA are exploring ad‑based models. It is important to note that Xbox’s ads will not interrupt the actual gameplay; they will be displayed prior to launch.
In‑game ad formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likeability. A combined approach—leveraging both pre‑game and in‑game ads—could offer advertisers a comprehensive solution, though it also risks greater pushback from players if not handled delicately.
Xbox has pledged that the advertisements will be non‑intrusive. By placing them before the game starts, the immersive experience remains intact, which benefits both the player and the advertiser.
Advertisers want their messages to feel like a natural part of the experience rather than a disruptive interruption. Relevance is another critical factor. No gamer 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 for the individual player will help prevent churn and keep the audience engaged, while also giving brands a highly effective platform to reach new consumers. Nevertheless, Xbox is navigating uncharted territory. The first unknown is how players will truly react to pre‑game advertising, and the second is whether the revenue generated will be sufficient to sustain the model over the long term. The move toward ad‑supported streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, but only time will reveal whether the strategy pays off.
Historically, many gaming ad initiatives have followed a "watch an ad, earn an extra life" model. Xbox’s proposal is different: players would watch an ad to access a game they already own. Our existing data set does not yet indicate how this will be received, but broader research on ad format perception shows that descriptors such as "non‑intrusive" and "immersive" rank highly among positive responses.
If Xbox—and potentially other platforms—can deliver on these expectations, they will likely set new standards for advertising in interactive entertainment. My forecast is that Xbox will neither be the first nor the last company to experiment with this approach. Advertising has existed in games for years, but rarely with the player experience as the central focus.
Should Xbox succeed, it could open the door for other developers and publishers to adopt similar models, ultimately making video games more affordable and accessible for everyday gamers.