Virginie Chesnais serves as the chief marketing officer at Happydemics, a platform that specializes in ad‑tech analytics. For many years, gamers have viewed in‑game advertising with suspicion, and that wariness is understandable. The reputation of ads in video games is mixed, often plagued by issues such as redirects to unrelated websites or apps, misleading content, and hide‑away close buttons that frustrate users. A recent study conducted by eMarketer revealed that 52 % of gamers would stop playing if they encountered several intrusive ad elements.
Losing half of an audience at the very moment you’re trying to engage them is hardly an effective approach. Nevertheless, advertising does not have to be a negative experience. The same research indicated that one in five gamers would actually increase the frequency with which they play a title if the in‑game advertisements were of a high quality and felt relevant. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, there is a genuine opportunity for well‑crafted ads to find a welcoming niche within the gaming ecosystem.
The argument for introducing an ads‑for‑games model is more compelling than many assume, and it draws on lessons learned from linear media. Services such as Netflix, Disney+ and other streaming platforms have demonstrated that a mixed revenue model—offering both subscription‑only and ad‑supported tiers—can be lucrative.
Should Xbox’s experiment prove successful, the company would not only preserve its paying subscriber base but also unlock a brand‑new revenue stream at a moment when additional income is highly desirable. This development matters because console gaming is increasingly positioned as a premium offering.
Prices for games, consoles, accessories, and downloadable content are rising steadily, making it harder for the average consumer to justify the expense and creating a barrier for casual players. Xbox itself has stated that, when executed correctly, advertising can help lower the cost of access to games.
Mobile gaming already provides a clear example: ad‑supported tiers allow players to engage with titles without the need for a large upfront purchase, thereby widening the market. Importantly, the advertising option would be entirely 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 keep its loyal fan base while simultaneously making games more approachable for newcomers. Although no formal survey data exists yet on this particular initiative, it is reasonable to assume that most gamers would tolerate a brief 30‑second commercial if it granted them an hour of gameplay on a favorite or new title.
Xbox likely has internal data supporting that assumption. Happydemics’ analysis of 285 in‑game campaigns across the UK and North America shows that in‑game ads consistently out‑perform TV, social, and standard online ads in terms of recall and attribution. In other words, gamers are more likely to remember an advertisement they see while playing and correctly associate it with the brand that displayed it.
Xbox’s “around‑the‑game” strategy—showing ads before the game begins rather than embedding them within the gameplay—adds another layer of interest. Our data indicate that these pre‑game placements generate higher recall and attribution scores compared with ads that appear directly inside the game environment. This distinction matters because, while we can often recall ads encountered while watching television or scrolling through social feeds, those memories do not always translate into a clear brand link.
Gaming appears to operate in a different league for this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based models. It is crucial to note, however, that Xbox’s ads are not in‑game; they are pre‑game. Traditional in‑game formats tend to excel further down the funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability. A hybrid approach—combining both pre‑game and in‑game ads—could theoretically provide the best of both worlds for advertisers, though it might also provoke greater resistance from players.
Xbox has promised that the ads will be non‑intrusive. By placing commercials before the gameplay starts, the company aims to preserve the immersive experience once the player is inside the world. This consideration benefits both gamers, who avoid interruptions, and advertisers, who want their messages to be part of a seamless experience rather than a disruptive nuisance.
Relevance will be another key factor. No one 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. By delivering contextual, well‑targeted ads, Xbox can keep players from abandoning the session while giving brands a valuable platform to reach fresh audiences. Nonetheless, Xbox is venturing into largely uncharted territory.
The first unknown is how gamers will react to pre‑game advertising; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The decision 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 new business models. Only time will reveal whether this strategy delivers the intended results. Historically, many gaming ad campaigns have relied on “watch an ad, earn an extra life” mechanics.
Xbox’s proposal, however, asks players to watch an ad simply to access a game they already own. Our existing data set does not yet indicate how this will be received. Research on ad‑format perception—where participants 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 want advertising in gaming to succeed, these two attributes will be essential metrics to monitor. My forecast is that Xbox will neither be the first nor the last company to trial such a model. Advertising has been part of gaming for years, but rarely with the player’s experience as the primary focus.
Should Xbox manage to strike the right balance, it could pave the way for other publishers to follow suit, ultimately making video games more affordable and accessible for the everyday gamer.