Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform focused on advertising technology. For years, many gamers have viewed in‑game advertising with suspicion, and that wariness is understandable. The reputation of ads in video games is mixed, often marred by annoying redirects, misleading content, or hard‑to‑find close buttons that frustrate players.
A recent study by eMarketer revealed that 52 % of gamers would abandon a session if they encountered multiple intrusive ad elements. Losing half of an audience at the moment you’re trying to engage them is hardly an effective tactic. However, advertisements do not have to be a negative experience. The same research indicated that one in five gamers would actually play a title more often 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 ads could find a natural home within the ecosystem. The argument for a modest ad‑for‑games model is stronger than many assume, and it has already been demonstrated to some extent by linear media.
Platforms such as Netflix, Disney+ and other streaming services have proven that a hybrid model—offering both ad‑free and ad‑supported tiers—can generate significant revenue while expanding the audience. If Xbox’s experiment succeeds, it could preserve its subscription base and unlock a brand‑new revenue stream at a moment when the company is eager for fresh income. This development matters because console gaming is increasingly positioning itself as a premium product.
Prices for games, consoles, accessories, and downloadable content continue to rise, creating a financial barrier for the average player. Xbox itself has stated that, when executed correctly, advertising can lower the cost of entry to gaming. Mobile gaming already illustrates how ad‑supported tiers can give players a foothold in the market without demanding a large upfront payment. Crucially, the approach would be optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those willing to tolerate brief ads could enjoy a reduced‑cost option. By offering a two‑tier system, Xbox hopes to keep its loyal fan base while simultaneously making games more approachable for newcomers. Although we lack concrete survey data on this specific rollout, it is reasonable to assume that the majority of gamers would tolerate a 30‑second commercial if it meant playing a beloved title or trying a new game for an hour. Xbox’s internal data likely supports this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the UK and North America shows that in‑game advertising consistently outperforms TV, social, and online formats in terms of recall and attribution. 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—placing ads before the gameplay begins rather than embedding them within the experience—adds another layer of appeal. Our data indicate that pre‑game placements generate higher recall and attribution scores compared with ads that appear directly inside the game world.
This distinction is important because, while we can often recall ads seen on television or scrolling through social feeds, we do not always link those impressions to specific brands. Gaming appears to operate in its own league for brand‑memory metrics, which likely explains why companies such as Xbox and EA are exploring ad‑based models more aggressively. It is worth noting that Xbox’s ads are not in‑game; they are pre‑game. Traditional in‑game formats tend to excel further down the funnel, delivering stronger lifts in brand image, consideration, interest, and likeability.
A blended approach—combining pre‑game and in‑game ads—could offer advertisers the best of both worlds, though it might also provoke additional pushback from players. Xbox has promised that the ads will be non‑intrusive, a claim that makes sense. By serving commercials before the game starts, the core immersive experience remains untouched.
This benefits both gamers, who retain uninterrupted play, and advertisers, who want their messages to complement rather than disrupt the session. Relevance will be key.
Nobody wants to see a cat‑food commercial when they don’t own a cat, or an advertisement for a game they have already completed. Contextual, targeted ads that make sense for the individual player will help prevent premature exits and provide brands with a premium platform to reach fresh audiences.
Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how players will react to the presence of ads at all; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The move toward ad‑supported game streaming reflects a bold strategy from Xbox CEO Asha Sharma, who has shown a willingness to experiment and take calculated risks.
Whether this gamble pays off remains to be seen. Historically, many gaming ad programs have been built around “watch an ad, earn an extra life” mechanics. Xbox’s proposition is different: players would watch an ad to access a game they already own.
Our existing data set does not yet reveal how this will be received. Related research on ad‑format perception—asking participants who remember an ad to choose positive descriptors—has consistently highlighted “non‑intrusive” and “immersive” as top attributes. If Xbox, and potentially other platforms in the future, aim to make gaming ads successful, these two qualities will be essential to monitor.
In my view, Xbox will not be the first nor the last company to test such a model. Advertising in games has existed for a long time, 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 similar initiatives across the industry and, more importantly, make video games far more accessible to everyday gamers.