Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have approached in‑game advertising with suspicion, and their wariness is understandable.
The reputation of ads in video games is mixed at best, often plagued by annoying redirects to external sites, misleading content, or close buttons that are difficult to locate. A recent study conducted by eMarketer highlighted that 52 % of players would stop playing if they encountered multiple disruptive advertising elements. Losing half of your audience the moment you try to engage them is hardly an effective strategy. Nevertheless, advertisements do 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. This suggests that well‑crafted, non‑intrusive ads can add value rather than detract from the experience. Xbox is currently piloting an ad‑supported game‑streaming service at a time when the overall cost of playing is climbing steadily.
In such an environment, premium‑quality advertisements could find a natural and welcomed home within the gaming ecosystem. The argument for introducing a form of "ads‑for‑games" model is stronger than many might assume, and it has already been partially validated by the success of linear media platforms. Services like 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 subscriber base.
If Xbox’s experiment proves profitable, the company could not only preserve its paying subscribers but also unlock an entirely new, previously untapped income stream—a development that would be especially valuable given the brand’s current financial pressures. This issue matters because console gaming is increasingly being positioned as a premium offering.
The price tags attached to new games, consoles, accessories, and downloadable content (DLC) are rising, creating a financial barrier for the average player. Xbox itself has acknowledged that, when executed correctly, advertising can lower the cost of entry to gaming. The mobile gaming sector already provides evidence that ad‑supported tiers can give players a way to engage with games without the need for large upfront purchases.
Crucially, any advertising model Xbox introduces would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are willing to tolerate brief commercials could enjoy a reduced cost of access.
By offering a two‑tier system, Xbox hopes to retain its loyal fan base while simultaneously making games more accessible to newcomers. Although there is no concrete survey data on this specific announcement yet, it is reasonable to assume that the majority of gamers would tolerate a 30‑second advertisement if it meant they could play a beloved title or a new release for an hour.
Xbox’s own analytics are likely to confirm this hypothesis. Happydemics data drawn from 285 in‑game campaigns across the United Kingdom and North America reveal that in‑game advertisements consistently outperform TV, social, and standard online ads in terms of recall and attribution. In other words, players are more likely to remember an ad they saw while gaming and to correctly associate it with the sponsoring brand.
This is where Xbox’s “around‑the‑game” approach—showing ads before the gameplay begins rather than embedding them within the game world—becomes intriguing. Our research indicates that these pre‑game formats achieve higher recall and attribution scores compared with ads placed directly inside the game environment. The significance lies in the fact that, while we may recall ads seen on television or scrolling through social feeds, those memories do not always translate into a clear brand association.
Gaming appears to occupy a unique niche where ad recall and brand linkage are stronger, which likely explains why companies such as Xbox and Electronic Arts (EA) are increasingly exploring ad‑based gaming models. It is essential to note that Xbox’s ads would be pre‑game, not in‑game. Traditional in‑game ad formats tend to excel further down the marketing funnel, delivering better outcomes for brand image uplift, consideration, interest, and overall likeability. A hybrid strategy that combines both pre‑game and in‑game placements could theoretically provide the best of both worlds for advertisers, but it might also provoke greater resistance from players who are sensitive to interruptions.
Xbox has pledged that the ads will be non‑intrusive, a claim that is easy to understand. By placing ads before the actual gameplay starts, the company aims to preserve the immersive experience that gamers cherish. 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 interruption.
Relevance will be key. 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 contextually appropriate and targeted, Xbox can minimize the risk of players abandoning a session at the sight of an irrelevant commercial, while simultaneously providing brands with a highly effective platform to reach new audiences. Nevertheless, Xbox is venturing into 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 has demonstrated a willingness to experiment with new business models. Only time will reveal whether this strategy pays off. Historically, many gaming ad campaigns have relied on a "watch an ad, earn an extra life" mechanic.
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 provide insight into how this particular trade‑off will be received. However, research on ad‑format perception—where participants who recall an ad are asked to select positive descriptors—has consistently highlighted "non‑intrusive" and "immersive" as the most favored attributes. If Xbox and future adopters aim to make advertising in gaming a lasting success, these two metrics will be critical to monitor.
My forecast is that Xbox will neither be the first nor the last platform to experiment with such a model. Advertising within games has existed for years, but it has rarely been implemented with the player’s experience at the forefront. Should Xbox manage to strike the right balance, it could pave the way for other gaming companies to follow suit, ultimately making video games more affordable and accessible for everyday gamers.