Virginie Chesnais serves as chief marketing officer at the ad‑technology analytics firm Happydemics. For many years, gamers have approached in‑game advertising with skepticism, and their concerns are not unfounded.
The reputation of ads in video games is mixed, often plagued by issues such as redirects to unrelated sites, misleading content, or hard‑to‑find close buttons that frustrate players. A recent study conducted by eMarketer highlighted that 52 % of gamers would abandon a session if they encountered several disruptive advertising elements.
Losing half of the audience at the moment you are trying to engage them is hardly an effective tactic. Nevertheless, advertising does not have to be a negative experience. 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 a high quality and felt relevant. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of playing games steadily climbing, well‑crafted advertisements could find a natural home within the gaming ecosystem.
The argument for a "ads‑for‑games" model is more compelling than many assume, and it has already been demonstrated to some extent by linear media platforms. Services such as Netflix, Disney+ and other streaming giants have shown that a hybrid model—offering both ad‑free and ad‑supported tiers—can generate significant revenue while expanding the audience base.
Should Xbox’s experiment succeed, it would not only preserve its subscription‑based revenue but also unlock an entirely new, previously untapped stream of income at a moment when the brand is eager for fresh cash flow. This development matters because console gaming is increasingly being positioned as a premium offering. Prices for games, consoles, accessories, and downloadable content have risen to levels that many casual players find difficult to justify, creating a barrier to entry for the everyday enthusiast. Xbox itself has stated that, when executed correctly, advertising can lower the cost of accessing games.
The mobile‑gaming sector already provides a useful precedent: ad‑supported tiers enable players to try games without paying large upfront fees, thereby widening the market. Importantly, the model remains optional. Players 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 while simultaneously making games more affordable for newcomers.
Although there is no specific survey data on this particular announcement yet, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second commercial if it granted them an hour of playtime in a favorite or 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 reveal that in‑game advertisements consistently out‑perform TV, social, and other online formats in terms of ad recall and attribution. Players are more likely to remember an ad they saw while gaming and correctly associate it with the brand that displayed it.
Xbox’s “around‑the‑game” approach—showing ads before the game launches rather than embedding them within the gameplay—adds another layer of intrigue. Our research shows that pre‑game placements enjoy a clear advantage in recall and attribution when compared with intrinsic in‑game slots.
The distinction matters because, while we may notice ads on television or social feeds, we do not always link those impressions to specific brands. Gaming appears to occupy a unique position in this regard, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based revenue models. It is crucial to note that Xbox’s ads are not in‑game; they appear pre‑game.
Traditional in‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability. A combined strategy—leveraging both pre‑game and in‑game ads—could theoretically provide advertisers with the best of both worlds, though it might also provoke greater pushback from players.
Xbox has pledged that the advertisements will be non‑intrusive. By placing them before the gameplay begins, the company aims to preserve the immersive experience that gamers cherish. This consideration benefits both the player, who avoids interruptions, and the advertiser, who wants their message to be part of a seamless experience rather than a disruptive annoyance.
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 provide genuine value will help ensure players do not abandon the session at the sight of a commercial, while giving brands an effective platform to reach new audiences.
Xbox is venturing into largely uncharted territory—both in terms of player reception and the financial viability of the model as a long‑term revenue source. The move to test ad‑supported game streaming reflects a bold, risk‑taking attitude from Xbox CEO Asha Sharma, who appears willing to experiment with new business models. Historically, many gaming ad campaigns have relied on "watch an ad, get an extra life" mechanics. Xbox’s proposal differs: 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 particular exchange will be received. Nevertheless, broader research on ad‑format perception indicates that descriptors such as "non‑intrusive" and "immersive" rank among the most positively viewed attributes. If Xbox—and potentially other platforms in the future—aim to make gaming ads a success, these two metrics will be essential to monitor. In my view, Xbox will not be the first nor the last company to experiment with this approach.
Advertising within games has existed for years, but it has rarely been designed with the player’s experience at its core. Should Xbox manage to strike the right balance, it could pave the way for similar initiatives across the industry, ultimately making video games more accessible to the everyday gamer.