Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and their concerns are not unfounded.
The reputation of ads in video games is mixed, often marred by redirects to unrelated sites, misleading content, or hide‑away close buttons that frustrate users. A recent study by eMarketer highlighted that 52 % of players would stop playing if they encountered multiple intrusive ad elements. Losing half of an audience at the moment you are trying to engage them is hardly an effective tactic. However, the same research also revealed 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.
With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming steadily climbing, well‑crafted advertisements could find a natural home within the ecosystem. The argument for a hybrid "ads‑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 a consistent, ad‑free tier can coexist profitably alongside a lower‑cost, ad‑supported tier. Should Xbox’s experiment succeed, it would not only preserve its paying subscriber base but also unlock a fresh revenue stream at a moment when the brand is eager for additional cash flow. This development matters because console gaming is increasingly being positioned as a premium experience.
Prices for games, consoles, accessories, and downloadable content have risen to the point where many casual players find them difficult to justify. The result is a growing barrier to entry for the everyday gamer.
Xbox itself has stated that, when executed correctly, advertising can help lower the cost of accessing games. The mobile‑gaming sector already provides evidence that ad‑supported tiers can serve as a gateway for players who are unwilling or unable to make large upfront purchases. By offering an optional, ad‑based entry point, Xbox can keep its core fans happy while simultaneously widening its audience.
Although no formal survey has yet measured gamers’ willingness to view ads for Xbox’s new service, it is reasonable to assume that a large majority would tolerate a 30‑second commercial if it meant unlocking an hour of playtime on a favorite or newly released title. Happydemics’ data, drawn from 285 in‑game campaigns across the United Kingdom and North America, consistently shows that in‑game advertising outperforms TV, social, and other online formats in terms of recall and attribution.
In other words, players are more likely to remember an ad they see while gaming and correctly associate it with the brand that served it. Xbox’s strategy focuses on "around‑the‑game" placements—ads that appear before the game launches rather than embedded within the gameplay itself.
Our research indicates that these pre‑game formats generate stronger ad recall and attribution than intrinsic in‑game placements. This distinction matters because, while traditional TV or social ads can be remembered, they are not always linked to a specific brand in the consumer’s mind.
Gaming, by contrast, appears to create a tighter brand‑ad association, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based monetisation models. It is crucial to note that Xbox’s ads will sit outside the actual gameplay.
In‑game ad formats still hold advantages further down the funnel, delivering higher lifts in brand image, consideration, interest, and overall likability. A blended approach—combining pre‑game and in‑game ads—could theoretically offer the best of both worlds for advertisers, but it also risks provoking greater pushback from players who value an uninterrupted experience.
Xbox has pledged that the ads will not be intrusive. By placing commercials before the game begins, the company aims to preserve the immersive nature of the session. This is a win‑win: players enjoy an uninterrupted gaming experience, and advertisers benefit from a captive audience that is primed to receive the message without feeling interrupted. Relevance will be key.
No gamer wants to see an advertisement for cat food when they don’t own a cat, or for a game they have already completed. Contextual, well‑targeted ads will help ensure that players do not abandon the session at the sight of an irrelevant commercial, while simultaneously giving brands a high‑impact platform to reach new demographics. Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how players will react to the presence of ads in a traditionally ad‑free environment.
The second unknown is whether the advertising revenue will be sufficient to sustain the model as a long‑term offering. 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 gamble pays off.
Historically, many gaming‑related ad campaigns have operated on a "watch an ad, earn an extra life" premise. 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, research on ad‑format perception shows that when participants are asked to describe the formats they remember, "non‑intrusive" and "immersive" consistently rank among the most favourable descriptors. If Xbox—and potentially other platforms—aim to make gaming ads successful, these two attributes will be essential metrics to monitor.
In my view, Xbox will neither be the first nor the last company to test such a strategy. 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 adopt similar models, ultimately making video games more affordable and accessible for everyday players.