Virginie Chesnais serves as chief marketing officer at Happydemics, an analytics platform that specializes in advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and that wariness is not unfounded. The reputation of ads in interactive entertainment has been tarnished by experiences such as redirects to unrelated websites, misleading messages, or the absence of an obvious way to close the advertisement. These annoyances have left a sour taste in the mouths of many players.
A recent study conducted by eMarketer highlighted the severity of the problem: more than half—52 percent—of respondents said they would abandon a game if they encountered several intrusive ad elements. Losing half of an audience at the very moment you are trying to engage them is hardly a winning formula. Nevertheless, advertisements do not have to be synonymous with frustration.
The same research revealed a silver lining: one in five gamers indicated they would play a title more often if the ads presented within it were of high quality and relevance. In other words, well‑crafted, non‑disruptive advertising can actually enhance the gaming experience for a segment of the community.
Xbox is currently experimenting with an ad‑supported game‑streaming service, and the broader industry is witnessing a steady rise in the cost of playing—whether that cost is the price of a console, the purchase price of a new release, or the expense of downloadable content and accessories. In that environment, premium‑quality ads could find a natural home.
The logic behind a hybrid "ads‑for‑games" model is not new; it has already been proven in linear media. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that offering a lower‑priced, ad‑supported tier can generate substantial revenue while still retaining a paying subscriber base. Should Xbox’s experiment succeed, the company would not only preserve its existing subscription revenue but also unlock an entirely new, previously untapped stream of income—a development that could be crucial at a time when the brand is seeking fresh financial levers. This issue matters because console gaming is increasingly being positioned as a premium service.
The combined price tags of hardware, software, peripherals, and microtransactions are becoming harder for the average consumer to justify. Those price pressures create a barrier that keeps many potential players on the sidelines. Xbox itself has stated that, when executed correctly, advertising can lower the cost of entry to gaming.
The mobile‑gaming sector already offers a proof point: ad‑supported tiers allow players to try a game without paying an upfront fee, often in exchange for watching short video ads. This model expands the audience and can convert a portion of ad‑watching users into paying customers later on. Crucially, the approach remains optional.
Players who prefer an uninterrupted experience can simply pay the subscription fee to avoid ads. By providing a two‑tier system—ad‑supported versus ad‑free—Xbox hopes to keep its loyal fan base satisfied while simultaneously making games more reachable for newcomers.
Although no formal survey data on Xbox’s latest announcement is available yet, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it meant they could play a favorite title or a brand‑new game for an hour without paying extra. Xbox’s internal data and market research are likely to confirm this intuition. Happydemics has analyzed 285 in‑game advertising campaigns across the United Kingdom and North America, finding that in‑game ads consistently outperform television, social‑media, and other online formats in terms of 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. The distinction between "around‑the‑game" ads—those displayed before a session begins—and ads embedded within the gameplay itself is also important. Our data show that pre‑game placements enjoy a clear advantage in recall and attribution compared with intrinsic in‑game placements.
This suggests that showing a short video before the player launches a title can be an effective way to capture attention without breaking immersion. Why does this matter? While we can often recall ads we see on TV or scrolling through a social feed, the connection to the actual brand is sometimes weak.
Gaming, by contrast, appears to create a stronger link between the ad and the advertiser, which explains why companies like Xbox and Electronic Arts are increasingly exploring ad‑based revenue models. It is also worth noting that Xbox’s current plan focuses on pre‑game ads rather than intrusive in‑game banners or pop‑ups.
In‑game formats tend to excel later in the marketing funnel, boosting brand‑image uplift, consideration, interest, and overall likability. Combining both pre‑game and in‑game approaches could provide advertisers with a balanced toolkit, though it might also generate additional pushback from players who value an uninterrupted experience. Xbox has pledged that any advertisements will be non‑intrusive.
By placing ads before the game starts, the company aims to preserve the immersive nature of the gameplay itself. This approach benefits both the player—who can enjoy an uninterrupted session—and the advertiser, who wants their message to be part of a positive experience rather than a disruption. Relevance will be another key factor.
Nobody wants to see an ad for cat food if they don’t own a cat, or a promotion for a game they have already completed. Contextual, well‑targeted ads that make sense to the individual player will help prevent the dreaded "ad fatigue" that can cause users to quit the platform altogether. Nevertheless, Xbox is venturing into uncharted territory.
First, it must gauge how gamers will react to a model that asks them to watch an ad in order to access a game they already own. Second, it must determine whether the revenue generated will be sufficient to justify a long‑term commitment to the strategy. 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 ad campaigns have been built around a "watch an ad, get an extra life" premise, offering a tangible in‑game reward in exchange for ad exposure. Xbox’s proposal differs: players would watch an ad to unlock access to a title they already own, without any additional in‑game benefit.
Our existing data set does not yet tell us how this trade‑off will be perceived. However, broader research on ad format perception indicates that when respondents are asked to describe ad experiences, terms such as "non‑intrusive" and "immersive" frequently emerge as the most positive descriptors.
If Xbox—and potentially other platforms in the future—wish to make advertising a sustainable part of gaming, these two attributes will need to be central to their design. My forecast is that Xbox will neither be the first nor the last major console maker to test this kind of model. Advertising has been part of the gaming ecosystem for years, but rarely with the player’s experience as the primary focus. Should Xbox succeed in delivering ads that are relevant, brief, and placed at the right moment, it could pave the way for other companies to follow suit, ultimately making video games more affordable and accessible for the everyday gamer.