Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have approached in‑game advertising with suspicion, and the wariness is understandable. The reputation of ads in video games is mixed at best, often plagued by issues such as redirects to unrelated sites, misleading content, or close buttons that are difficult to locate. These annoyances can quickly sour the experience.
A recent study conducted by eMarketer highlighted the severity of the problem: 52 % of respondents said they would stop playing a title if they encountered multiple intrusive ad elements. Losing more than half of an audience at the very moment you are trying to engage them is hardly a winning formula. However, advertisements do not have to be synonymous with frustration.
The same research revealed a more optimistic finding – one in five gamers indicated they would increase the frequency with which they played a game if the in‑game ads were of high quality and relevance. In other words, well‑executed advertising can actually enhance, rather than diminish, player enjoyment.
Xbox is currently experimenting with an ad‑supported game‑streaming service at a time when the overall cost of gaming continues to climb. If the company can deliver ads that meet the standards set by the survey, there is a genuine opportunity for a mutually beneficial arrangement.
The logic behind introducing an ad‑based revenue stream mirrors the model that has proved successful for linear media platforms. Services such as Netflix, Disney+, and other on‑demand video providers have demonstrated that offering both ad‑free and ad‑supported tiers can generate substantial income while still retaining a broad subscriber base.
Should Xbox’s experiment succeed, it would not only preserve revenue from existing subscription customers but also unlock a previously untapped source of earnings – a development the brand could certainly use. This issue is particularly relevant because console gaming is increasingly positioned as a premium offering. Prices for hardware, full‑price titles, accessories, and downloadable content have risen steadily, creating a financial hurdle for the average consumer.
When the barrier to entry becomes too high, many potential players simply walk away. Xbox itself has stated that, when executed correctly, advertising can lower the cost of accessing games.
The mobile‑gaming sector already provides a clear precedent: ad‑supported tiers allow players to engage with titles without paying large upfront fees, opening the door for a broader audience. Crucially, the approach remains optional. Users who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads. By offering a two‑tier system, Xbox hopes to keep its loyal fan base happy while simultaneously inviting newcomers who might be deterred by price.
Although there is no concrete survey data on this specific rollout yet, it is reasonable to assume that most gamers would tolerate a brief 30‑second commercial if it meant they could play a favorite or newly released title for an hour without additional cost. Xbox likely has internal data supporting this hypothesis. 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 digital formats when it comes to 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.
Xbox’s “around‑the‑game” strategy—showing advertisements before the gameplay begins rather than embedding them within the game world—adds another layer of intrigue. Our data indicate that pre‑game placements enjoy a distinct advantage in terms of recall and attribution when compared with ads that appear directly inside the game environment. The distinction matters because remembering an ad does not automatically translate to linking it to a brand. While many people can recall a commercial they saw on TV or while scrolling through social feeds, they may struggle to associate that memory with the advertiser.
Gaming appears to be an outlier, delivering stronger brand‑linkage metrics, which likely explains why companies such as Xbox and EA are increasingly exploring ad‑based models. It is also worth noting that Xbox’s ads are not meant to interrupt the actual gameplay; they are displayed before the session starts. Traditional in‑game formats tend to excel further down the conversion funnel, delivering higher lifts in brand image, consideration, interest, and overall likability. A hybrid approach—combining pre‑game and in‑game placements—could theoretically give advertisers the best of both worlds, but it also risks provoking greater pushback from players who are sensitive to any perceived intrusion.
Xbox has promised that its advertisements will be non‑intrusive. By placing ads in the pre‑game window, the company aims to preserve the immersive experience once the player is actually inside the title. This consideration benefits both gamers, who want uninterrupted play, and advertisers, who prefer their messages to be part of a seamless experience rather than a disruptive interruption. Relevance will be another key factor.
No one wants to see a promotion for cat food when they don’t own a cat, or an ad for a game they have already completed. Contextual, targeted ads that make sense for the individual player will help keep the experience pleasant and reduce the likelihood of users abandoning the session at the first sign of advertising. Nevertheless, Xbox is venturing into largely uncharted territory.
The company must gauge how players will react to this new format and determine whether the revenue generated will justify making ad‑supported streaming a permanent feature. The decision to explore ad‑supported streaming reflects the boldness of Xbox CEO Asha Sharma, who has shown a willingness to experiment with unconventional strategies. Time will reveal whether the gamble pays off. Historically, many gaming ad campaigns have relied on “watch an ad, earn an extra life” mechanics.
Xbox’s proposal differs: it asks players to watch an ad simply to access a game they already own. Our existing data set does not yet indicate how this model will be received.
However, broader research on ad‑format perception shows that when participants are asked to describe ads they recall positively, terms like “non‑intrusive” and “immersive” rank among the most frequent. If Xbox—and potentially other platforms—aim to make gaming ads successful, they will need to focus closely on these two attributes. My forecast is that Xbox will neither be the first nor the last company to test such a strategy. Advertising within games has existed for years, but it has rarely been designed with the player’s experience as the primary concern.
Should Xbox manage to strike the right balance, it could pave the way for similar initiatives across the industry and make video games considerably more affordable for everyday gamers.