Virginie Chesnais serves as chief marketing officer at the ad‑technology analytics firm Happydemics. While gamers have traditionally viewed in‑game advertising with suspicion, that wariness is not unfounded. The reputation of ads in video games is mixed; players often encounter redirects to external sites, misleading content, or cumbersome close buttons that are difficult to locate, all of which contribute to frustration. A recent study conducted by eMarketer revealed that 52 percent of gamers would abandon a session if they were bombarded with multiple intrusive ad elements.
Losing half of an audience at the moment you are trying to engage them is hardly an effective strategy. However, advertisements do not have to be inherently negative. 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. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, well‑crafted ads could find a welcoming home in the console ecosystem.
The rationale for introducing an advertising‑based revenue model is more compelling than many anticipate, especially when we look at the success of linear media platforms. Services such as Netflix, Disney+, and other streaming giants have demonstrated that a hybrid model—offering both ad‑free subscriptions and lower‑cost, ad‑supported tiers—can generate substantial income while expanding the audience base. If Xbox’s experiment proves viable, it could not only preserve its paying subscriber base but also unlock a fresh, previously untapped source of revenue at a moment when the brand is in need of additional cash flow. This development matters because console gaming is increasingly positioning itself as a premium experience.
The price tags attached to new releases, console hardware, accessories, and downloadable content are rising steadily, creating a financial barrier for the average player. Xbox itself has acknowledged that, when executed correctly, advertising can lower the cost of entry to gaming. Mobile gaming has already shown that ad‑supported tiers can provide a gateway for players who are reluctant or unable to make large upfront purchases.
Crucially, any advertising model would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are price‑sensitive could opt into the ad‑supported tier.
By offering a two‑track system, Xbox hopes to retain its loyal fanbase while simultaneously making games more accessible to newcomers. Although there is currently no publicly available survey data specific to this announcement, it is reasonable to assume that the majority of gamers would tolerate a 30‑second commercial if it granted them an hour of gameplay on a favorite or newly released title.
Xbox likely has internal data supporting this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertisements consistently outperform television, social media, and other online formats when it comes to recall and attribution. Players are more likely to remember an ad they saw while playing and correctly associate it with the sponsoring brand.
Moreover, Xbox’s “around‑the‑game” approach—showing ads before the game launches rather than within the gameplay itself—demonstrates an even stronger advantage in recall and attribution compared with intrinsic in‑game placements. This distinction is important because, while we can often remember ads seen on TV or scrolling through feeds, that memory does not always translate into brand recognition. Gaming appears to occupy a unique position where ad recall and brand linkage are exceptionally high, which may explain why companies like Xbox and EA are increasingly exploring ad‑based gaming models. It is also worth noting that Xbox’s planned ads are pre‑game, not embedded within the gameplay.
Traditional in‑game ad formats tend to excel further down the marketing funnel, delivering higher scores for brand image uplift, consideration, interest, and likeability. A combined strategy that leverages both pre‑game and in‑game ads could offer advertisers a comprehensive solution, though it might also provoke greater pushback from players who are sensitive to any form of advertising. Xbox has pledged that its ads will be non‑intrusive.
By placing commercials before the game starts, the company aims to preserve the immersive experience that gamers cherish. This approach benefits both the player—who enjoys an uninterrupted session—and the advertiser, who wants their message to be part of the experience rather than a disruption. Relevance will be key.
Nobody 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. Contextual, targeted ads that make sense for the individual player will help prevent premature exits and give brands an effective platform to reach new audiences. Nevertheless, Xbox is venturing into uncharted territory.
It remains uncertain how players will react to pre‑game commercials and whether the revenue generated will justify a long‑term commitment to the model. The move reflects a bold, risk‑taking attitude from Xbox CEO Asha Sharma, who appears willing to experiment with new monetisation strategies. Only time will reveal whether this gamble pays off.
Historically, many gaming ad campaigns have followed a "watch an ad, earn an extra life" structure. Xbox’s proposal is different: players would watch an ad to access a game they already own. Our existing data set does not yet indicate how this will be received.
However, research on ad format perception shows that descriptors such as "non‑intrusive" and "immersive" rank among the most positively viewed attributes. If Xbox—and potentially other platforms—aim to make gaming ads successful, these two metrics will be essential to monitor.
My forecast is that Xbox will neither be the first nor the last company to trial this kind of approach. Advertising in video 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 similar initiatives across the industry and, importantly, make video games more affordable and reachable for everyday gamers.