Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform that specializes in advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and that wariness is not unfounded.
The reputation of ads in video games is mixed at best, often because they redirect users to external sites or apps, present misleading content, or feature close buttons that are difficult to locate, all of which generate frustration. A recent study conducted by eMarketer highlighted the severity of the problem: more than half of respondents—52 percent—said they would abandon a game if they encountered several disruptive advertising elements. Losing half of a potential audience the moment you try to monetize them is hardly an effective tactic. However, advertisements do not have to be synonymous with annoyance.
The same research revealed a more optimistic finding: one in five gamers indicated they would play a title more often if the in‑game ads were of high quality and seamlessly integrated. This suggests that, when executed correctly, advertising can actually enhance the gaming experience rather than detract from it.
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 offering an ad‑based option for games is stronger than many assume, especially when we look at the success of linear media platforms. Services such as Netflix, Disney+, and other on‑demand video providers have demonstrated that a dual‑tier model—one tier that is subscription‑only and another that is ad‑supported—can generate significant revenue while expanding the audience.
If Xbox’s experiment proves viable, it could accomplish two things simultaneously: it would preserve the paying subscriber base that relies on the traditional Xbox Game Pass model, and it would unlock an entirely new revenue stream at a moment when the brand is seeking fresh sources of income. The relevance of this development becomes clearer when we consider how console gaming is evolving into a premium offering. Prices for new games, consoles, accessories, and downloadable content have steadily risen, creating a financial barrier for many casual players. Xbox itself has stated that, when implemented thoughtfully, advertising can lower the cost of entry and make gaming more affordable for a broader audience.
Mobile gaming has already shown that ad‑supported tiers can act as a gateway for players who are unwilling or unable to make large upfront purchases. By offering a free or low‑cost tier that includes advertisements, developers can attract users who might later convert to paying customers once they become invested in the experience. Importantly, the ad‑supported model would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads.
This two‑tier approach aims to keep existing loyal fans happy while simultaneously opening the door for newcomers who might be deterred by high upfront costs. Although there is no concrete survey data on Xbox’s specific rollout yet, it is reasonable to predict that a large majority of gamers would tolerate a brief, 30‑second advertisement if it granted them an hour of gameplay in a beloved title or gave them access to a new release. Happydemics’ own data, drawn from 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 when it comes to recall and attribution. In other words, players are more likely to remember an ad they see while playing a game and correctly associate it with the brand that served it.
Xbox’s “around‑the‑game” strategy—placing ads before the gameplay begins rather than embedding them within the game world—adds another layer of intrigue. Our research indicates that these pre‑game placements achieve higher recall and attribution rates compared with ads that appear directly inside the game environment.
This distinction matters because, while many ads on TV or social feeds are memorable, they do not always translate into a clear brand connection. Gaming appears to be in a league of its own for forging that link, which explains why companies such as EA and Xbox are increasingly exploring ad‑based monetization. It is crucial to note that Xbox’s ads would not be intrusive in‑game interruptions. By delivering advertisements prior to the start of a session, the company hopes to preserve the immersive nature of the experience.
This approach benefits both players—who avoid mid‑game disruptions—and advertisers, who want their messages to be part of a smooth, enjoyable journey rather than a jarring interruption. Relevance of the ads themselves will also be a key factor. Nobody 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 that align with a player’s interests can keep users engaged and prevent them from abandoning the session at the first sign of irrelevant content.
Nevertheless, Xbox is navigating uncharted waters. The first unknown is how players will react to a mandatory pre‑game ad, even if it is optional to pay to skip it. The second unknown is whether the revenue generated will be sufficient to justify making the model a permanent fixture. The decision to explore ad‑supported streaming reflects the boldness of 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 gaming ad campaigns have relied on “watch an ad, earn an extra life” mechanics. Xbox’s proposal is different: it asks players to watch an ad in order to access a game they already own. Our current dataset does not provide a clear answer on how that will be received.
Nevertheless, broader research on ad format perception shows that when respondents recall an ad, they often describe it as “non‑intrusive” and “immersive,” two qualities that Xbox appears to prioritize. If future advertisers and platforms aim to succeed in the gaming arena, these metrics will be essential to monitor. My forecast is that Xbox will neither be the first nor the last company to test this approach. Advertising has been part of gaming for decades, but it has rarely been implemented with the player’s experience at the forefront.
Should Xbox manage to strike the right balance, it could pave the way for other developers and publishers to follow, ultimately making video games more accessible to everyday gamers worldwide.