Virginie Chesnais serves as Chief Marketing Officer at the ad‑tech analytics firm Happydemics, and she offers a thoughtful look at the evolving role of advertising within the gaming ecosystem. For many years, gamers have approached in‑game advertisements with suspicion, and that wariness is not without justification.
The reputation of ads in video games has been tarnished by intrusive redirects, misleading content, and poorly designed close buttons that frustrate users. In fact, a recent study conducted by eMarketer revealed that 52 % of players would abandon a session if they encountered multiple disruptive advertising elements. Losing more than half of your audience at the moment you are trying to engage them is clearly a poor strategic move.
Nevertheless, advertising does not have to be synonymous with irritation. The same eMarketer survey highlighted a contrasting insight: one in five gamers indicated they would play a title more often if the in‑game advertisements were of high quality and relevance.
This suggests that when ads are thoughtfully crafted, they can enhance rather than detract from the gaming experience. Xbox is currently experimenting with an ad‑supported game‑streaming service, and the broader industry context is one of rising costs. The price tags attached to consoles, individual games, accessories, and downloadable content have all been climbing, creating a financial barrier for the average player. In this environment, well‑executed advertising could serve as a valuable tool to lower the entry price for gamers, much as it has done in other entertainment sectors.
The logic behind offering an ad‑supported tier is not new. Linear media platforms such as Netflix, Disney+, and other streaming services have demonstrated that a hybrid model—combining subscription revenue with ad‑supported options—can generate substantial income while expanding the audience base.
If Xbox’s experiment proves successful, it could not only preserve its existing subscriber base but also unlock a fresh, previously untapped revenue stream at a time when the brand is eager for additional cash flow. The significance of this development lies in the fact that console gaming is increasingly being positioned as a premium service. The cumulative cost of hardware, software, and microtransactions can quickly add up, making it difficult for casual gamers to justify the expense. Xbox itself has acknowledged that, when executed correctly, advertising can reduce the cost of access to games.
Mobile gaming has already shown the viability of ad‑supported tiers, allowing players to enjoy games without paying large upfront fees. Translating that model to console gaming could open the door for a broader audience.
Importantly, the proposed system would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those willing to tolerate a short commercial break could enjoy a reduced‑price or even free tier. This two‑tier approach aims to retain loyal fans while simultaneously attracting newcomers who might otherwise be deterred by price. Although there is no concrete survey data yet on Xbox’s specific plan, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it granted them an hour of playtime on a favorite title or a brand‑new release.
Happydemics’ own research, covering 285 in‑game campaigns across the United Kingdom and North America, shows that in‑game advertisements consistently outperform traditional TV, social, and online ads in terms of recall and attribution. Players are more likely to remember an ad they see while immersed in a game and to correctly associate it with the sponsoring brand.
Xbox’s strategy focuses on “around‑the‑game” placements—ads that appear before the game launches rather than during gameplay. Our data indicate that these pre‑game formats have a distinct advantage in recall and attribution when compared with ads that are embedded directly within the game world.
While in‑game ads can excel further down the funnel—boosting brand image, consideration, interest, and likeability—pre‑game spots avoid disrupting the immersive experience, which is crucial for both players and advertisers. The distinction matters because, although we can often remember commercials seen on television or while scrolling through social media, that memory does not always translate into a clear brand connection. Gaming, on the other hand, appears to create a stronger link between the ad and the brand, which explains why companies like Xbox and EA are increasingly exploring ad‑based revenue models. Xbox has pledged that its advertisements will not be intrusive.
By placing ads before the game starts, the company hopes to preserve the continuity of the gameplay experience. This approach benefits advertisers as well; they receive a captive audience without interrupting the core activity that players value most. Relevance will be another key factor. Nobody enjoys seeing an ad 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 to the player will be essential for maintaining engagement and preventing users from abandoning the platform at the first sign of irrelevant content. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to pre‑game advertising; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The move reflects the boldness of Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment and take calculated risks. Only time will reveal whether this strategy pays off.
Historically, many gaming ad experiences have followed a "watch an ad, get an extra life" model, offering a direct in‑game reward for viewing. Xbox’s proposal is different: 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 will be perceived, but broader research on ad format perception shows that descriptors such as "non‑intrusive" and "immersive" are highly valued by audiences. If Xbox can deliver ads that meet these criteria, it stands a good chance of winning player approval.
Looking ahead, I anticipate that Xbox will not be the only company to test this hybrid approach. Advertising has been part of gaming for years, but rarely with the player’s experience as the primary focus.
Should Xbox succeed in integrating ads in a way that feels seamless and optional, it could set a precedent for other publishers, making video games more affordable and accessible for everyday gamers while opening new monetisation pathways for the industry as a whole.