Virginie Chesnais serves as chief marketing officer at Happydemics, an analytics platform that focuses on advertising technology. For years, many gamers have approached in‑game advertising with suspicion, and their wariness is understandable.
The reputation of ads within video games is mixed at best—players often encounter redirects to unrelated sites or apps, misleading content, or hidden close buttons that are difficult to locate, all of which fuel frustration. A recent study conducted by eMarketer highlighted that 52 % of gamers would abandon a session if they were bombarded with multiple intrusive ad elements. Losing half of an audience at the very moment you try to engage them is hardly an effective strategy.
However, advertising does not have to be synonymous with annoyance. The same survey revealed that one in five gamers would actually increase the frequency with which they played a title if the in‑game advertisements were of high quality and relevance. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of playing continuing to climb, there is a genuine opportunity for well‑crafted ads to find a welcoming niche within the gaming ecosystem.
The logic behind offering an ad‑based model for games mirrors the success seen in linear media. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that a hybrid approach—combining a premium, ad‑free tier with a lower‑cost, ad‑supported tier—can generate substantial revenue while expanding the audience base. Should Xbox’s experiment prove viable, it would not only preserve its subscription‑based revenue but also unlock a fresh, previously untapped income stream at a moment when the brand could greatly benefit from additional cash flow. This development matters because console gaming is increasingly positioning itself as a premium offering.
The price tags attached to new releases, consoles, accessories, and downloadable content (DLC) are steadily rising, making it more difficult for the average consumer to justify the expense. Xbox itself has acknowledged that, when executed correctly, advertising can reduce the cost of entry for gamers.
The mobile gaming sector already illustrates how ad‑supported tiers can provide a gateway for players who might otherwise be deterred by high upfront costs. Crucially, the ad‑supported option would be entirely optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those who are comfortable with occasional commercials could enjoy a lower‑cost pathway.
By offering a two‑tier system, Xbox hopes to retain its loyal fan base while simultaneously widening its reach to newcomers who might be hesitant to invest heavily at the outset. Although there is no concrete survey data on the latest Xbox announcement, it is reasonable to assume that the majority of gamers would tolerate a 30‑second advertisement if it meant gaining an hour of playtime on a favorite or brand‑new title. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertisements consistently outshine TV, social, and online ads when it comes to recall and attribution. In other words, players are more likely to remember the brand behind an ad that appears within a game and correctly associate it with the advertiser.
Xbox’s “around‑the‑game” strategy—placing ads before the game starts rather than embedding them within the gameplay—adds another layer of intrigue. Our data indicate that pre‑game formats deliver a distinct advantage in terms of ad recall and attribution compared with intrinsic in‑game placements.
This distinction matters because, while we can often remember ads we see while watching television or scrolling through social feeds, we do not always link those impressions to the corresponding brands. Gaming appears to operate in its own league for this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based models. It is important to note that Xbox’s ads would not interrupt the actual gameplay; they would appear beforehand.
In‑game ad formats tend to perform better further down the conversion funnel, boosting brand image, consideration, interest, and likeability. A hybrid approach that combines both pre‑game and in‑game ads could theoretically offer the best of both worlds for advertisers, though it might also provoke greater resistance from players. Xbox has pledged that the advertisements will be non‑intrusive.
By delivering ads before the game launches, the company aims to preserve the immersive experience that gamers cherish. This approach benefits both players—who avoid mid‑session interruptions—and advertisers, who want their messages to be part of the experience rather than a disruptive nuisance. Relevance will be key. Nobody wants to see an ad for cat food if they don’t own a cat, or a promotion for a game they have already completed.
By ensuring that ads are contextually appropriate and provide a clear rationale for their placement, Xbox can minimize the risk of players abandoning the session at the sight of an irrelevant commercial, while simultaneously offering brands an effective 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, and 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 appears willing to experiment with new business models. Only time will reveal whether this gamble pays off. Historically, many gaming ad initiatives have followed a "watch an ad, earn an extra life" structure.
Xbox’s proposition differs: it asks players to watch an ad in order to access a game they already own. Our existing data set does not yet indicate how this particular trade‑off 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 possibly other platforms in the future, aim to make advertising a permanent fixture in gaming, these two qualities will be essential metrics to monitor. My forecast is that Xbox will neither be the first nor the last to trial such a strategy.
Advertising in games has existed for many years, but it has rarely been implemented with the player’s experience at the forefront. Should Xbox succeed in striking the right balance, it could pave the way for other gaming companies to follow suit, ultimately making video games more affordable and accessible for the everyday gamer.