Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and that wariness isn’t unfounded. The reputation of ads inside video games is mixed at best, with common complaints ranging from redirects to unrelated websites, misleading content, and the frustration of trying to locate a tiny close button that seems deliberately hidden.
A recent study by eMarketer highlighted that 52 % of players would abandon a session if they encountered several disruptive advertising elements. Losing half of your audience at the moment you’re trying to engage them is hardly a winning formula. However, advertisements do not have to be a negative experience. The same research revealed that one in five gamers would actually increase the frequency with which they play a title if the ads presented were of high quality and relevance.
This is why Xbox’s trial of an ad‑supported game‑streaming service arrives at an opportune moment, as the overall cost of gaming continues to climb. Well‑crafted, non‑intrusive ads could find a natural home in the gaming ecosystem. The argument for a hybrid "ads‑for‑games" model is stronger than many assume, and it has already been demonstrated in linear media. Services such as Netflix, Disney+ and other streaming platforms have shown that a tiered approach—offering both ad‑free and ad‑supported subscriptions—can generate significant revenue while expanding the audience base.
Should Xbox’s experiment succeed, it would not only preserve its existing paying subscribers but also unlock a brand‑new revenue stream that the company currently needs. The relevance of this development is underscored by the fact that console gaming is increasingly being positioned as a premium offering. Prices for games, consoles, peripherals and downloadable content have risen steadily, making it harder for the average consumer to justify the expense and creating a barrier for casual or budget‑conscious gamers.
Xbox itself has noted that, when executed correctly, advertising can lower the cost of entry to gaming. Mobile gaming already provides a clear precedent: ad‑supported tiers allow players to experience games without paying a large upfront fee, thereby widening the market.
Crucially, the model remains optional. Players who prefer an uninterrupted experience can still pay a subscription fee to avoid ads. By providing a two‑tier system, Xbox hopes to keep its loyal fan base satisfied while simultaneously making games more reachable for newcomers.
Although we lack specific survey data on this particular announcement, it is reasonable to assume that most gamers would tolerate a 30‑second commercial if it granted them an hour of playtime on a favorite or new title. 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 demonstrate that in‑game advertisements consistently out‑perform TV, social and standard online ads in terms of recall and attribution. In other words, players are far more likely to remember an ad they see while gaming and to correctly associate it with the sponsoring brand.
Xbox’s "around‑the‑game" strategy—showing ads before the gameplay begins rather than embedding them within the experience—adds another layer of interest. Our research indicates that pre‑game placements achieve a clear advantage in recall and attribution when compared with ads that appear directly inside the game world. Why does this matter?
While we may recall a commercial that aired during a television break or a banner that appeared while scrolling through a feed, that memory does not always translate into a clear brand connection. Gaming appears to operate in a separate league for these metrics, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based revenue models. It is important to note that Xbox’s ads will be pre‑game, not in‑game.
Traditional in‑game formats tend to excel further down the marketing funnel, delivering stronger lifts in brand image, consideration, interest and overall likeability. Combining both pre‑game and in‑game formats could theoretically give advertisers the best of both worlds, though it also risks provoking greater pushback from players who are sensitive to interruptions.
Xbox has pledged that the advertisements will be non‑intrusive. By placing them before the game starts, the company aims to preserve the immersive experience once the player is actually inside the title. This approach benefits both gamers—who retain a seamless play session—and advertisers, who want their messages to be part of the experience rather than a disruptive interruption. Relevance will be key.
No one enjoys seeing a promotion for cat food when they don’t own a cat, or an ad for a game they have already completed. By delivering contextual, purposeful ads, Xbox can keep players from abandoning the session while giving brands a highly effective platform to reach fresh audiences. Nonetheless, Xbox is navigating largely uncharted territory.
The first unknown is how players will react to a new advertising model; the second is whether the revenue generated will be sufficient to sustain the approach 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 shown a willingness to experiment with innovative business models. Only time will reveal whether the strategy pays off.
Historically, many gaming ad campaigns have followed a "watch an ad, earn an extra life" formula. Xbox’s proposal, however, 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 received. Nevertheless, broader research on ad‑format perception shows that respondents who remember an ad often describe the experience as "non‑intrusive" and "immersive"—the two most popular positive descriptors.
If Xbox and future adopters aim to make advertising a lasting component of gaming, these two attributes will be critical success factors. In my view, Xbox will neither be the first nor the last platform to test such a model.
Advertising within games has existed for years, but rarely with the player’s experience as the primary focus. Should Xbox manage to strike the right balance, it could open the door for other publishers to follow suit, ultimately making video games more affordable and accessible for everyday gamers.