Virginie Chesnais serves as the chief marketing officer at Happydemics, an ad‑tech analytics firm. For many years, gamers have looked at in‑game advertising with suspicion, and that wariness is understandable. The reputation of ads in the gaming sphere is mixed at best; players often encounter redirects to unrelated websites or apps, misleading content, or hide‑away close buttons that are difficult to locate, all of which fuel frustration. A recent study conducted by eMarketer highlighted that 52 % of respondents would stop playing a title if they ran into several intrusive ad elements.
Losing half of an audience at the very moment you are trying to engage them is hardly an effective tactic. However, the same research also revealed a more optimistic side: one in five gamers said they would actually increase the frequency with which they played a game if the in‑game advertisements were of a high quality and felt relevant.
This nuance is especially relevant now that Xbox is piloting an ad‑supported game‑streaming service while the overall cost of gaming continues to climb. High‑caliber, well‑targeted ads could find a natural home in this evolving ecosystem. The argument for introducing an ad‑based revenue model in games is more compelling than many assume, and it has already been demonstrated to some extent in the world of linear media.
Services such as Netflix, Disney+, and other streaming platforms have proven that a dual‑tier approach—offering both ad‑free subscriptions and cheaper, ad‑supported options—can generate substantial income while expanding the audience base. Should Xbox’s experiment succeed, it would not only preserve its paying subscriber base but also unlock a fresh, previously untapped stream of revenue at a moment when the brand is eager for new financial inflows. The significance of this development lies in the fact that console gaming is increasingly being positioned as a premium product. Prices for games, consoles, accessories, and downloadable content keep rising, making it harder for the average consumer to justify the expense.
This creates a barrier that excludes many potential players. Xbox itself has acknowledged that, when executed properly, advertising can lower the cost of accessing games.
Mobile gaming already offers a glimpse of this model: ad‑supported tiers enable players to engage with titles without the need for large upfront purchases, thereby broadening the market. Importantly, the ad‑supported option would be entirely optional. Gamers who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are comfortable with occasional commercials could enjoy a reduced cost of entry.
By implementing a two‑tier system, Xbox hopes to keep its loyal fan base satisfied while simultaneously making games more approachable for newcomers. Although we lack concrete survey data on the latest Xbox announcement, it is reasonable to assume that a majority of gamers would tolerate a 30‑second advertisement if it granted them an hour of playtime on a beloved or new title.
Happydemics’ own data, drawn from 285 in‑game campaigns across the UK and North America, consistently shows that in‑game advertising outperforms television, social, and other online formats when it comes to ad recall and attribution. Players are more likely to remember an ad they saw while gaming and correctly associate it with the sponsoring brand. Xbox’s strategy of placing ads "around the game"—for example, showing a commercial before the session begins—adds another layer of advantage.
Our research indicates that these pre‑game placements generate stronger recall and attribution than ads embedded directly within the gameplay experience. This distinction matters because, while people can recall ads seen on TV or social feeds, they do not always connect those impressions to the correct brand. Gaming appears to be in a league of its own for this metric, which likely explains why companies such as Xbox and EA are increasingly exploring ad‑based models. It is crucial to note that Xbox’s ads would not interrupt gameplay; they would appear before the game starts.
In‑game ad formats, on the other hand, tend to excel further down the funnel, delivering higher lifts in brand image, consideration, interest, and overall likability. A hybrid approach that combines both pre‑game and in‑game ads could offer advertisers the best of both worlds, though it might also provoke greater pushback from players who value an uninterrupted experience. Xbox has pledged that the advertisements will be non‑intrusive.
By confining commercials to the pre‑game window, the company aims to preserve the immersive nature of the gaming session. This consideration benefits both the player—who avoids disruption—and the advertiser, who wants their message to be part of a seamless experience rather than a nuisance. Relevance will be another key factor.
No gamer wants to see an ad for cat food when they have no feline companion, or an ad for a game they have already completed. Contextual, well‑targeted ads that make sense to the individual player will help ensure that the audience does not abandon the session at the first sign of a commercial, while simultaneously giving brands a high‑impact platform to reach new demographics. Nevertheless, Xbox is venturing into largely uncharted territory.
It remains to be seen how players will react to this new format and whether the revenue generated will justify making ad‑supported streaming a permanent fixture. The move reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who appears willing to experiment with innovative business models.
Only time will reveal whether the strategy pays off. Historically, many of our gaming‑ad initiatives have relied on "watch an ad, earn an extra life" mechanics. Xbox’s proposal differs: players would watch an ad to access a game they already own, rather than to gain a bonus. Our existing data set does not yet capture how this particular exchange will be perceived.
However, broader research on ad format perception shows that descriptors such as "non‑intrusive" and "immersive" consistently rank among the most favorable. If Xbox—and potentially other platforms in the future—aim to make gaming ads a success, these two attributes will be essential metrics to monitor. In my view, Xbox will neither be the first nor the last company to test this kind of model. Advertising in games has existed for years, 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 similar initiatives across the industry and, more importantly, make video games significantly more accessible to everyday gamers.