Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and that wariness is understandable.
The reputation of ads in video games is mixed at best; players often encounter redirects to unrelated websites or apps, misleading content, or dismissible close buttons that are hard to find, all of which contribute to a frustrating experience. A recent study conducted by eMarketer highlighted the severity of the issue: 52 percent of respondents said they would stop playing a title if they ran into multiple disruptive advertising elements. Losing half of an audience at the moment you are trying to engage them is clearly not a sustainable approach. However, the same research also revealed a more optimistic side—one in five gamers indicated they would actually play a game more often if the in‑game advertisements were of high quality and well integrated.
This nuance is especially relevant now that Xbox is piloting an ad‑supported game‑streaming service while the overall cost of gaming continues to climb. High‑quality ads could find a natural home in this ecosystem, offering a compromise between revenue generation and player satisfaction. The argument for incorporating an ad‑supported tier into a gaming platform is not new; it has already been demonstrated in the world of linear media. Services such as Netflix, Disney+, and other streaming giants have proven that a mixed‑model approach—offering both ad‑free subscriptions and cheaper, ad‑supported options—can be financially lucrative.
If Xbox’s experiment succeeds, it could not only preserve its existing subscriber base but also unlock a fresh, previously untapped revenue stream at a moment when the company needs additional cash flow. The relevance of this development is heightened by the fact that console gaming is increasingly positioned as a premium service. Prices for new consoles, blockbuster titles, accessories, and downloadable content have risen steadily, creating a financial barrier for the average consumer. Xbox itself has acknowledged that, when executed correctly, advertising can lower the cost of entry and make gaming more accessible.
We have already seen how ad‑supported tiers have opened doors for mobile gamers who might otherwise be unable to afford upfront purchases. By providing a choice—players can either watch ads for free or pay a subscription fee for an ad‑free experience—Xbox hopes to keep its loyal fans while simultaneously inviting newcomers who are price‑sensitive. Although there is no specific survey data on this particular announcement yet, it is reasonable to assume that most gamers would tolerate a brief 30‑second commercial if it granted them an hour of gameplay on a favorite or newly released title. Xbox’s internal data likely supports this hypothesis.
Happydemics has analyzed 285 in‑game advertising campaigns across the United Kingdom and North America, finding that in‑game ads consistently outperform traditional TV, social, and online formats in terms of recall and attribution. In other words, players are more likely to remember an ad they see while gaming and correctly associate it with the brand that displayed it.
Xbox’s “around‑the‑game” strategy—placing ads just before a game starts rather than embedding them within the gameplay—adds another layer of appeal. Our research shows that these pre‑game placements achieve higher recall and attribution rates compared with ads that appear directly inside the game world. This distinction matters because, while we may notice ads on television or social feeds, we do not always link them to the sponsoring brand. Gaming, however, appears to create a stronger mental connection between the ad and its source, which explains why companies like Xbox and EA are exploring ad‑based models more aggressively.
It is crucial to note that Xbox’s ads are pre‑game, not in‑game. In‑game formats tend to excel further down the marketing funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability.
A hybrid approach that combines both pre‑game and in‑game ads could theoretically offer advertisers the best of both worlds, though it might also provoke greater resistance from players who prefer an uninterrupted experience. Xbox has pledged that the ads will be non‑intrusive. By delivering commercials before the actual gameplay begins, the platform aims to preserve the immersive nature of the gaming session.
This approach benefits both the player—who can enjoy an uninterrupted experience once the game launches—and the advertiser, whose message is delivered without breaking the flow of play. Relevance is another key factor.
No gamer wants to see an advertisement for cat food when they don’t own a cat, or for a game they have already completed. By ensuring that ads are contextual and targeted, Xbox can keep players from abandoning the session while giving brands a highly effective platform to reach new audiences.
Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how gamers will react to a regular stream of pre‑game ads; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The decision to explore ad‑supported streaming reflects a willingness by Xbox CEO Asha Sharma to experiment and take calculated risks, but only time will reveal whether the strategy pays off. Historically, many gaming ad campaigns have followed a “watch an ad, earn an extra life” model, offering a direct gameplay reward in exchange for ad exposure.
Xbox’s proposal is different: players would watch an ad to gain access to 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 does, however, provide some optimism. When participants are asked to describe the most appealing aspects of an ad format they remember, “non‑intrusive” and “immersive” frequently emerge as top descriptors.
If Xbox—and potentially other platforms in the future—can deliver ads that meet these criteria, they will likely see higher acceptance rates. In my view, Xbox will neither be the first nor the last major player to test this kind of model. Advertising has been part of gaming for years, but it has rarely been designed with the player’s experience as the primary focus.
Should Xbox manage to strike the right balance, it could set a precedent for other companies and, more importantly, make video games considerably more affordable for everyday gamers.