Virginie Chesnais serves as Chief Marketing Officer at the ad‑tech analytics firm Happydemics. For years, many gamers have looked at in‑game advertising with suspicion, and that wariness is understandable.
The reputation of ads in video games is mixed at best: they often redirect users to external sites or apps, sometimes feature misleading content, and can hide close buttons so poorly that players struggle to dismiss them. A recent eMarketer study highlighted that 52 % of gamers would stop playing if they encountered several intrusive ad elements.
Losing half of your audience at the very moment you try to engage them is hardly an effective approach. Nevertheless, advertising does not have to be a nuisance. The same research indicated that one in five gamers would actually increase the frequency with which they play a title if the in‑game ads were of high quality and relevance.
This suggests that, when executed properly, ads can enhance rather than detract from the gaming experience. Enter Xbox’s experimental ad‑supported game‑streaming service. As the price of participating in gaming continues to climb—through more expensive consoles, premium titles, accessories, and downloadable content—the prospect of well‑crafted ads becomes increasingly attractive. The logic mirrors what we have already observed in linear media: platforms such as Netflix, Disney+, and other streaming services have successfully introduced ad‑supported tiers that generate additional revenue while keeping a free or lower‑cost option for consumers.
If Xbox’s model proves viable, it could preserve its subscription base and simultaneously unlock a brand‑new revenue stream at a moment when the company is eager for fresh income sources. This development matters because console gaming is evolving into a premium service. The cumulative cost of hardware, software, and add‑ons is creating a financial barrier for many would‑be players.
Xbox itself has noted that, when handled correctly, advertising can lower the cost of entry into gaming. Mobile gaming has already demonstrated that ad‑supported tiers can invite players who are unwilling or unable to make large upfront purchases, thereby expanding the overall market. Crucially, the approach is entirely optional. Gamers who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads, while those who are comfortable with occasional commercials can enjoy a reduced‑price or even free access model.
By offering a two‑tier system, Xbox hopes to keep its dedicated fan base while also attracting newcomers who might otherwise be priced out. Although there is no specific survey data on this particular announcement yet, it is reasonable to assume that a substantial majority of gamers would tolerate a 30‑second advertisement if it meant they could play a beloved title or try a new game for an hour without paying the full price. Xbox likely has internal data supporting this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America reveals that in‑game ads consistently out‑perform traditional TV, social, and online placements in terms of recall and attribution.
Players are more likely to remember an ad they saw while gaming and correctly associate it with the brand that served it. This advantage becomes even more pronounced when ads are displayed “around‑the‑game”—for example, during the loading screen or before the gameplay begins—rather than being embedded directly within the game world.
Our data show that these pre‑game formats generate higher recall and stronger brand attribution than intrinsic in‑game placements. The distinction is important because, while we can often recall ads seen on television or scrolling through a feed, we do not always link those impressions to a specific brand.
Gaming appears to occupy a unique position in the advertising landscape, delivering stronger brand‑memory connections, which likely explains why companies such as Xbox and EA are increasingly exploring ad‑based gaming models. It is also worth noting that Xbox’s planned ads are pre‑game, not in‑game. In‑game formats tend to excel further down the conversion funnel, delivering better outcomes for brand‑image uplift, consideration, interest, and overall likability.
A hybrid strategy that combines both pre‑game and in‑game ads could offer advertisers the best of both worlds, though it may also provoke greater resistance from players who value an uninterrupted experience. Xbox has emphasized that the ads will be non‑intrusive. By placing commercials before the game starts, the company aims to preserve the immersive nature of the gameplay itself.
This is a win‑win: players enjoy an ad‑free session once the game begins, and advertisers benefit from a captive audience that is primed to receive the message without feeling disrupted. Relevance will be another key factor. Nobody wants to see an advertisement for cat food when they don’t own a cat, or for a game they have already completed.
Contextual, targeted ads that make sense within the player’s interests will reduce the likelihood of users abandoning the session at the first sign of a commercial, while simultaneously providing brands with a high‑quality platform to reach fresh audiences. Nevertheless, Xbox is navigating uncharted territory. The first unknown is how players will react to this new ad 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 approaches. Only time will reveal whether this gamble pays off.
Historically, many gaming ad campaigns have relied on a “watch an ad, earn an extra life” mechanic. Xbox’s proposal is different: it asks players to watch an ad in order to access a game they already own. Our existing data set does not yet indicate how this particular exchange will be received. However, broader research on ad‑format perception shows that descriptors such as “non‑intrusive” and “immersive” rank among the most positively received attributes.
If Xbox—and potentially other platforms—can deliver ads that embody these qualities, they will be well positioned for success. My forecast is that Xbox will not be the first nor the last major player to trial this strategy.
Advertising in games has existed for years, but often without the player’s experience as the primary focus. Should Xbox manage to strike the right balance, it could pave the way for other companies to adopt similar models, ultimately making video games more affordable and accessible for everyday gamers.