Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have approached in‑game advertising with a healthy dose of skepticism, and their concerns are 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 difficult to locate, all of which contribute to a frustrating experience. A recent study conducted by eMarketer highlighted the severity of the issue: 52 % of respondents said they would stop playing a title if they were bombarded with multiple disruptive advertisements. Losing more than half of an audience at the very moment you are trying to engage them is hardly an effective strategy. However, advertisements do not have to be a detriment.
The same research revealed that one in five gamers would actually increase the frequency with which they played a game if the in‑game ads were of high quality and relevance. This suggests that well‑executed advertising can coexist with a positive player experience.
Xbox is currently experimenting with an ad‑supported game‑streaming service at a time when the overall cost of gaming is on an upward trajectory. In this environment, premium‑grade advertisements could find a welcoming home within the gaming ecosystem.
The argument for introducing a form of “ads‑for‑games” model is more compelling 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 an ad‑supported tier alongside a subscription‑only tier can generate substantial revenue while still delivering a consistent user experience. If Xbox’s pilot proves successful, the company could not only preserve its existing paying subscriber base but also unlock a completely new revenue stream—something the brand could certainly use given its current financial pressures. The relevance of this approach becomes clearer when we consider that console gaming is increasingly being positioned as a premium service.
Prices for new releases, hardware, accessories, and downloadable content (DLC) continue to climb, making it harder for the average consumer to justify the expense. This creates a barrier that discourages many potential players from entering the market. Xbox itself has stated that, when executed correctly, advertising can lower the barrier to entry and make gaming more affordable.
The mobile gaming sector already provides evidence that ad‑supported tiers can attract users who are unwilling or unable to pay large upfront costs. By offering a free‑or‑low‑cost option that is supported by short advertisements, Xbox could open the door for a broader audience to experience its ecosystem.
Crucially, this model would be entirely optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads. By presenting a two‑tier system—ad‑supported and ad‑free—Xbox hopes to keep its loyal fan base satisfied while simultaneously making its games more accessible to newcomers.
While we lack specific survey data on the latest Xbox announcement, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second commercial if it meant they could play a beloved title or a brand‑new release for an hour without paying extra. Xbox’s internal research likely supports 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 when it comes to recall and attribution.
Players are more likely to remember an ad they saw while gaming and correctly associate it with the brand that delivered it. This is where Xbox’s “around‑the‑game” strategy—ads displayed before the game starts rather than embedded within the gameplay—becomes particularly interesting. Our data indicate that pre‑game placements generate stronger ad recall and attribution than intrinsic in‑game slots. The distinction matters because, although we can often recall ads seen on television or scrolling through social feeds, we do not always link those impressions to a specific brand.
Gaming, by contrast, appears to create a stronger mental connection between the ad and its sponsor, which may explain why companies like Xbox and EA are increasingly exploring ad‑based monetization models. It is essential to note 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 conversion funnel, delivering higher lifts in brand image, consideration, interest, and overall likability.
A hybrid approach that combines both pre‑game and in‑game ads could theoretically provide the best of both worlds for advertisers, though it also risks provoking greater pushback from players who value an uninterrupted experience. Xbox has pledged that the advertisements will be non‑intrusive.
By placing ads prior to the start of a game, the company aims to preserve the immersive nature of the experience. This is a crucial consideration not only for gamers but also for advertisers, who want their messages to feel like a natural part of the journey rather than an unwelcome interruption. Relevance will be key. No player wants to see an ad for cat food if they do not own a cat, or a promotion for a game they have already completed.
By delivering contextual, well‑targeted ads, Xbox can keep players engaged and prevent them from abandoning the session at the first sign of irrelevant content, while giving brands an effective platform to reach new audiences. Nonetheless, Xbox is venturing into largely uncharted territory. The first unknown is how players will react to pre‑game advertising; 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 shown a willingness to experiment with new business models. Whether this gamble pays off remains to be seen.
Historically, many of our gaming‑ad projects have involved “watch an ad, earn an extra life” type incentives. Xbox’s proposal differs: it asks players to watch an ad simply to access a game they already own. Our existing data set does not yet reveal how this will be received.
However, broader research on ad‑format perception indicates that descriptors such as “non‑intrusive” and “immersive” are among the most positively received. If Xbox—and potentially other platforms in the future—aim to make advertising a permanent fixture in gaming, they will need to focus closely on these two metrics. My forecast is that Xbox will neither be the first nor the last company to test this approach. Advertising has been part of gaming for years, but rarely with the player’s experience as the primary focus.
Should Xbox succeed in balancing revenue generation with a respectful, player‑centric ad experience, it could pave the way for other developers and publishers to adopt similar models, ultimately making video games more affordable and reachable for the everyday gamer.