Virginie Chesnais serves as Chief Marketing Officer at the ad‑technology analytics firm Happydemics. For years, many gamers have looked at in‑game advertising with suspicion, and there are good reasons for that wariness.
The reputation of ads in video games is mixed at best; players often encounter redirects to unrelated websites or apps, misleading content, or dismissible close buttons that are hard to locate, all of which contribute to a frustrating experience. A recent study conducted by eMarketers highlighted that 52 % of respondents would abandon a game if they ran into multiple intrusive advertising elements. Losing half of your audience at the moment you’re trying to engage them is hardly an effective tactic. However, advertisements do not have to be synonymous with annoyance.
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 of a high standard and felt relevant. This insight arrives at a time when Xbox is piloting an ad‑supported game‑streaming service, and the overall cost of playing video games continues to climb. High‑quality, well‑placed ads could therefore find a receptive home within the gaming ecosystem.
The argument for integrating a modest ad‑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 a substantial revenue stream while still delivering a consistent user experience. Should Xbox’s experiment prove viable, it could not only preserve its existing subscription base but also unlock a brand‑new, previously untapped source of income—a development the company could certainly use. The relevance of this shift is underscored by the fact that console gaming is increasingly being positioned as a premium service.
Prices for games, consoles, accessories, and downloadable content have all risen sharply, making it harder for the average consumer to justify the expense. This creates a barrier that keeps many potential players on the sidelines. Xbox itself has acknowledged that, when executed correctly, advertising can lower the cost of entry for gamers. The mobile‑gaming sector already provides a clear example: ad‑supported tiers allow players to engage with games without having to make large upfront purchases, thereby expanding the market.
Importantly, any ad‑based model would remain optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads. By offering a two‑tier system, Xbox hopes to retain its loyal fan base while simultaneously making games more approachable for newcomers.
Although no concrete survey data on this specific rollout is yet available, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it meant they could play one of their favorite titles—or even a brand‑new game—for an hour. Xbox likely has internal data that supports this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertisements consistently out‑perform 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 saw while gaming and correctly associate it with the sponsoring brand. This is where Xbox’s “around‑the‑game” approach—ads that appear before the gameplay begins rather than embedded within the game world—becomes particularly intriguing.
Our data indicate that such pre‑game placements enjoy a distinct advantage in terms of recall and attribution when compared with ads that appear directly inside the game environment. The distinction matters because, while we may recall an ad that pops up during a TV show or while scrolling through a social feed, that memory does not always translate into a clear brand connection. Gaming appears to occupy its own niche in this respect, which likely explains why companies like Xbox and EA are exploring ad‑based gaming models more aggressively. It is also crucial to note that Xbox’s ads will not be intrusive in‑game; they will be shown before the game starts.
In‑game ad formats tend to excel further down the marketing funnel, delivering stronger lifts in brand image, consideration, interest, and likeability. A hybrid strategy that combines both pre‑game and in‑game ads could theoretically offer the best of both worlds for advertisers, though it might also provoke greater resistance from players.
Xbox has promised that the advertisements will be non‑intrusive, a claim that makes sense when the ads are presented prior to the actual gaming session. This timing ensures that the immersive experience remains untouched, which benefits both the player and the advertiser, the latter of whom wants their message to be part of the experience rather than a disruption. Relevance will be key.
No gamer wants to see an ad for cat food when they don’t own a cat, or an advertisement for a game they have already completed. By delivering contextual, purpose‑driven ads, Xbox can keep players from abandoning the session while giving brands a premium platform to reach fresh audiences. Nevertheless, Xbox is venturing into uncharted territory. The first unknown is how players will react to this new advertising format; the second is whether the revenue generated will be sufficient to sustain the model over the long term.
The move to explore ad‑supported game streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has shown a willingness to experiment with innovative ideas. Whether this particular strategy will pay off remains to be seen.
Historically, many gaming ad campaigns have followed a “watch an ad, earn an extra life” model. Xbox’s proposition is different: users would watch an ad to gain access to a game they already own.
Our existing data set does not yet reveal how this will be received. However, broader research on ad format perception—where respondents who recall an ad are asked to describe the format using positive adjectives—has consistently highlighted “non‑intrusive” and “immersive” as top descriptors. If Xbox and future industry players aim to make gaming ads a lasting success, these two attributes will be essential metrics to monitor.
In my view, Xbox will neither be the first nor the last company to experiment with this approach. Advertising has been part of gaming for a long time, but rarely 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, while simultaneously making video games far more accessible to everyday gamers.