Virginie Chesnais serves as chief marketing officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have viewed in‑game advertising with suspicion, and that wariness is understandable. The reputation of ads within video games is mixed at best: users often encounter redirects to unrelated websites or apps, misleading content, or “close” buttons that are difficult to locate, all of which generate frustration. A recent study conducted by eMarketer highlighted the severity of the problem, revealing that 52 % of respondents would abandon a game if they were bombarded with multiple intrusive ad elements.
Losing half of the potential audience at the moment you are trying to engage them is hardly an effective strategy. Nevertheless, advertising does 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 advertisements were of high quality and relevance. This suggests that, when executed properly, ads can enhance rather than detract from the gaming experience.
Xbox is currently piloting a new ad‑supported game‑streaming service at a time when the overall cost of gaming is on an upward trajectory. High‑quality, non‑intrusive ads could therefore find a receptive home within the console ecosystem. The argument for incorporating an advertising‑based revenue model into gaming is more compelling than many assume, and it already has a precedent in linear media. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that offering a lower‑priced, ad‑supported tier can generate substantial income while still delivering a consistent product.
Should Xbox’s experiment prove successful, the company would not only preserve its paying subscriber base but also unlock a fresh, previously untapped stream of revenue—something the brand could certainly use right now. The relevance of this approach becomes clearer when we consider that console gaming is increasingly positioned as a premium service. Prices for games, consoles, accessories, and downloadable content continue to climb, creating a financial barrier for the average player.
Xbox itself has acknowledged that, when handled correctly, advertising can lower the cost of access to games. The mobile‑gaming sector already shows that ad‑supported tiers can provide a gateway for users who are unwilling or unable to make large upfront purchases. It is also crucial to note that any advertising model would be entirely optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are price‑sensitive could opt into the ad‑supported tier. By offering a two‑tier system, Xbox aims to keep its loyal fan base satisfied while simultaneously making games more approachable for newcomers. Although there is no specific survey data on this particular announcement yet, it is reasonable to predict that the majority of gamers would tolerate a 30‑second commercial if it granted them an hour of gameplay on a favorite or brand‑new title.
Xbox likely has internal data that supports this assumption. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America indicates that in‑game advertisements consistently outperform television, social media, and other online formats in terms of ad 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.
Xbox’s “around‑the‑game” strategy—placing ads just before a game starts rather than embedding them within the gameplay itself—adds another layer of interest. Our data show that these pre‑game placements generate higher recall and attribution scores compared with traditional in‑game placements. This distinction matters because, while we may notice ads on TV or social feeds, we do not always link them to the appropriate brands. Gaming appears to occupy a unique space where ad recall is especially strong, which explains why companies like Xbox and EA are increasingly exploring ad‑based models.
It is essential to clarify that Xbox’s ads will not interrupt the actual gameplay; they will appear before the session begins. In‑game ad formats tend to excel further down the marketing funnel, delivering stronger brand‑image uplift, consideration, interest, and likeability. A hybrid approach that combines both pre‑game and in‑game ads could theoretically provide advertisers with the best of both worlds, though it might also provoke additional pushback from players who are sensitive to any form of advertising.
Xbox has pledged that the ads will be non‑intrusive, meaning they will be displayed before the game launches and will not break immersion. This is a vital consideration for both gamers and advertisers, as the latter want their messages to feel like a natural part of the experience rather than a disruptive interruption. Relevance will be key.
No player wants to see an advertisement for cat food if 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 keep players from abandoning the session at the sight of an irrelevant commercial, while simultaneously 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 these 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 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 will achieve its intended outcomes. Historically, our work in gaming advertising has focused on “watch an ad, earn an extra life” type incentives.
Xbox’s proposal is different: it asks players to watch an ad in order to access a game they already own. Our existing data set does not yet provide a clear answer on how this will be received. However, related research on ad‑format perception shows that when participants recall an ad, they often describe the experience as “non‑intrusive” and “immersive.” If Xbox and future adopters want to make gaming ads successful, these two attributes will be critical metrics to monitor. My forecast is that Xbox will neither be the first nor the last platform to test such a model.
Advertising in games has existed for many years, but it has not always been designed with the player’s experience in mind. 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.