Virginie Chesnais serves as Chief Marketing Officer at the ad‑technology analytics firm Happydemics. For many years, gamers have looked at in‑game advertising with suspicion, and their wariness is understandable.
The reputation of ads in video games is mixed; players often encounter redirects to unrelated websites or apps, misleading content, or tiny close buttons that are difficult to locate, all of which lead to frustration. A recent study conducted by eMarketer revealed that 52 percent of gamers would stop playing if they ran into several disruptive advertising elements.
Losing half of your audience at the moment you are trying to engage them is hardly a winning strategy. However, advertising does not have to be synonymous with annoyance.
The same survey 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. With Xbox presently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, well‑crafted advertisements could find a receptive home within the gaming ecosystem. The argument for introducing a modest advertising model into games is stronger than many assume, and it has already been demonstrated in linear media. Services such as Netflix, Disney+, and other streaming platforms have proven that offering both ad‑free and ad‑supported tiers can generate substantial revenue while keeping a broad subscriber base.
Should Xbox’s experiment succeed, it would not only preserve its paying customers but also unlock a fresh, previously untapped income stream at a moment when the brand is eager for additional cash flow. This development matters because console gaming is increasingly positioning itself as a premium experience. The price tags attached to new games, consoles, accessories, and downloadable content have risen sharply, making it harder for the average consumer to justify the expense and creating a barrier for casual gamers.
Xbox itself has stated that, when executed correctly, advertising can lower the cost of access to games. The mobile‑gaming sector already shows that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases.
By offering a free or low‑cost entry point, developers can attract a larger audience and later monetize through optional purchases or subscriptions. Importantly, the advertising model would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those who are comfortable with occasional ads could enjoy a reduced‑price or free tier.
This two‑tier approach aims to keep loyal fans happy while simultaneously opening the door for newcomers who might otherwise be priced out. Although there is no specific survey data on Xbox’s latest announcement, it is reasonable to assume that a majority of gamers would tolerate a short, 30‑second commercial if it meant gaining an hour of playtime on a favorite or brand‑new title. Xbox’s own analytics are likely to confirm this hypothesis.
Data from Happydemics covering 285 in‑game campaigns across the United Kingdom and North America demonstrate that in‑game advertising consistently outperforms television, social media, and standard online ads in terms of recall and attribution. Players tend to remember ads that appear within a game environment more accurately and are better able to link them to the sponsoring brands. Xbox’s “around‑the‑game” strategy—showing ads before the game launches rather than embedding them directly within the gameplay—adds another layer of interest.
Our research indicates that these pre‑game placements achieve higher recall and attribution scores compared with intrinsic in‑game placements. While traditional TV or social ads may be memorable, they do not always translate into a clear brand association. Gaming, by contrast, appears to excel in this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based gaming models.
It is crucial to note that Xbox’s ads will appear before the game, not during it. In‑game ad formats tend to perform better further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likeability. A hybrid approach that combines pre‑game and in‑game ads could theoretically give advertisers the best of both worlds, but it also raises the risk of pushback from players who are sensitive to interruptions.
Xbox has pledged that the advertisements will be non‑intrusive. By placing ads before the gameplay begins, the company hopes to preserve the immersive experience that gamers value. This approach benefits both players—who avoid disruption—and advertisers, who want their messages to be part of the experience rather than a nuisance. Relevance will be key.
No gamer wants to see an ad for cat food when they don’t own a cat, or an advertisement for a game they have already completed. Contextual, well‑targeted ads that make sense for the individual player will help prevent premature exits and provide brands with a premium platform to reach new audiences. Nonetheless, Xbox is venturing into largely uncharted territory. The first unknown is how players 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. Whether this gamble pays off remains to be seen. Historically, many gaming ad campaigns have followed a “watch an ad, earn an extra life” formula. 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 reveal how this will be received. Research on ad‑format perception—where participants recall an ad and then select positive descriptors—has consistently highlighted “non‑intrusive” and “immersive” as top attributes. If Xbox and other future adopters want to make advertising in gaming successful, these two qualities will be essential metrics to monitor. In my view, Xbox will neither be the first nor the last platform to experiment with such strategies.
Advertising has been part of gaming for many years, but it has rarely been designed with the player’s experience at the forefront. Should Xbox manage to strike the right balance, it could pave the way for other developers to follow, ultimately making video games more affordable and accessible for everyday players.