Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform that specializes in advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and that wariness is understandable. The reputation of ads within video games is mixed at best: players often encounter redirects to unrelated websites or apps, deceptive or irrelevant content, and frustratingly hard‑to‑find close buttons. A recent study conducted by eMarketer highlighted that 52 percent of gamers would abandon a session if they ran into multiple intrusive ad elements.
Losing half of an audience at the moment you are trying to engage them is hardly an effective approach. Nevertheless, advertising does not have to be a negative experience. The same eMarketer survey revealed that one in five gamers would actually play a title more often if the in‑game advertisements were of high quality and well integrated.
This suggests that, when executed correctly, ads can enhance rather than detract from the gaming experience. Xbox is currently piloting a new ad‑supported game‑streaming service, and with the overall cost of playing games on a steady upward trajectory, well‑crafted advertisements could find a receptive home within the console ecosystem. The argument for introducing a modest ad‑for‑games model is stronger than many anticipate, especially when we look at the success of linear media platforms. Services such as Netflix, Disney+, and other streaming giants have demonstrated that offering both ad‑free and ad‑supported tiers can generate substantial revenue while keeping a broad audience base.
If Xbox’s experiment proves viable, it could not only preserve its existing subscriber base but also unlock an entirely new revenue stream at a moment when the brand is seeking additional financial footing. This development matters because console gaming is increasingly being positioned as a premium service.
Prices for new games, consoles, accessories, and downloadable content have risen sharply, creating a financial barrier for the average player. Xbox itself has noted that, when implemented responsibly, advertising can lower the cost of entry to gaming. Mobile gaming already provides a clear example: ad‑supported tiers enable players to enjoy games without paying large upfront fees, thereby expanding the market.
Importantly, the ad‑supported option would be entirely optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those willing to watch ads could access the same content at a reduced price. By offering a two‑tier system, Xbox aims to keep its loyal fan base satisfied while simultaneously attracting newcomers who might otherwise be deterred by high costs. Although there is no concrete survey data on the current announcement, it is reasonable to assume that a large majority of gamers would tolerate a short, 30‑second advertisement if it meant they could play a beloved title or a new release for an hour without paying the full price.
Xbox likely has internal data supporting this hypothesis. Happydemics’ analysis of 285 in‑game advertising campaigns across the United Kingdom and North America shows that in‑game ads consistently outperform traditional TV, social, and online placements in terms of recall and attribution. In other words, players are more likely to remember an ad they saw while gaming and correctly associate it with the sponsoring brand. This advantage is even more pronounced for “around‑the‑game” formats—ads that appear before a game launches rather than during gameplay.
Our data indicate that these pre‑game placements achieve higher recall and attribution scores compared with ads embedded directly inside the game environment. The distinction matters because, while we can often recall ads seen on television or scrolling through social media, we do not always link them to the correct brand. Gaming appears to occupy a unique space where ad recall translates more directly into brand awareness.
This is likely why companies such as Xbox and EA are increasingly exploring ad‑based gaming models. It is crucial to note that Xbox’s plan focuses on pre‑game advertisements, not intrusive in‑game pop‑ups. In‑game ad formats tend to excel further down the conversion 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 the best of both worlds for advertisers, but it also risks greater pushback from players who are sensitive to interruptions. Xbox has pledged that the ads will be non‑intrusive. By placing ads before the gameplay begins, the company aims to preserve the immersive experience that gamers value.
This approach benefits both players—who enjoy an uninterrupted session—and advertisers, who want their messages to be part of the experience rather than a disruptive annoyance. Relevance will be 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.
Contextual, targeted ads that make sense for the individual player will be essential to prevent users from abandoning the session at the first sign of irrelevant content. When done correctly, these ads can provide brands with a premium platform to reach new audiences while keeping gamers satisfied. Nevertheless, Xbox is navigating uncharted waters. The first unknown is how players will react to the presence of ads on a console platform that has traditionally been ad‑free.
The second unknown is whether the revenue generated will be sufficient to sustain the model over the long term. Xbox CEO Asha Sharma’s decision to explore ad‑supported streaming reflects a willingness to experiment and take calculated risks, but only time will reveal whether the strategy pays off.
Historically, many gaming ad models have relied on a “watch an ad, earn an extra life” mechanic, offering a clear in‑game reward for the viewer’s time. 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 provide direct insight into how this particular trade‑off will be received. However, broader research on ad format perception shows that when people remember an ad, they often describe the experience using terms such as “non‑intrusive” and “immersive.” These descriptors were among the most popular in recent surveys.
If Xbox—and potentially other platforms in the future—aim to make gaming ads successful, they will need to focus heavily on these two qualities. My prediction is that Xbox will not be the first nor the last company to test this kind of model. Advertising in video 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 other gaming companies to adopt similar strategies, ultimately making video games more affordable and accessible for everyday players.