Virginie Chesnais serves as Chief Marketing Officer at the ad‑tech analytics firm Happydemics. For many years, gamers have looked at in‑game advertising with suspicion, 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 dismiss buttons that are hard to locate, all of which generate frustration. A recent study from eMarketer highlighted that 52 % of gamers would abandon a session if they ran into several intrusive ad elements.
Losing half of your audience the moment you try to engage them is hardly an effective strategy. However, 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 ads were of high quality and relevance.
With Xbox presently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, well‑crafted advertisements could find a natural home within the medium. The argument for a hybrid "ads‑for‑games" model is stronger than many assume, and it is already partially validated by 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 retaining subscribers. Should Xbox’s experiment prove viable, it would not only preserve its paying user base but also unlock a fresh, previously untapped income stream at a moment when the brand could greatly benefit from additional cash flow.
This development matters because console gaming is increasingly positioned as a premium offering. Prices for games, consoles, accessories, and downloadable content are soaring, making it harder for the average consumer to justify the expense and erecting a barrier for casual players. Xbox itself has stated that, when executed correctly, advertising can lower the cost of entry to gaming.
Mobile gaming has already shown that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases. Importantly, the model remains optional. Players who prefer an ad‑free experience can continue to pay for a subscription, while those who are comfortable with occasional commercials can enjoy a reduced‑price or even free access tier.
By offering a two‑tier system, Xbox hopes to keep its loyal fan base satisfied while simultaneously expanding accessibility for newcomers. Although there is currently no public survey data on this specific rollout, it is reasonable to predict that a large majority of gamers would tolerate a 30‑second advertisement if it meant they could play a beloved or brand‑new title for an hour.
Xbox likely has internal data that supports this assumption. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America reveals that in‑game ads consistently out‑perform television, social media, and other online formats in terms of recall and attribution. In other words, players are more likely to remember an ad they see while gaming and correctly associate it with the sponsoring brand.
This is where Xbox’s "around‑the‑game" strategy—ads that appear before the gameplay begins rather than embedded within the game world—becomes intriguing. Our data show that pre‑game placements enjoy a clear advantage in recall and attribution compared with intrinsic in‑game slots.
The distinction matters because, while we can often recall ads we see on TV or scrolling through a feed, those memories do not always translate into brand awareness. Gaming appears to sit in a league of its own for this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based models. It is crucial to note that Xbox’s ads will not interrupt the actual gameplay; they will be shown prior to the start of a session.
Traditional in‑game ad formats tend to excel further down the marketing funnel, driving improvements in brand image, consideration, interest, and likability. A combination of pre‑game and in‑game ads could theoretically give advertisers the best of both worlds, though it also risks heightened pushback from players who are sensitive to any form of interruption. Xbox has pledged that the advertisements will be non‑intrusive.
By placing them before the game launches, the company aims to preserve the immersive experience once the player is inside the virtual world. This approach benefits both gamers, who maintain their focus, and advertisers, who want their messages to feel like a seamless part of the experience rather than a disruptive nuisance. Relevance will be another key factor. No gamer wants to see a promotion for cat food when they don’t own a cat, or an ad for a game they have already completed.
Contextual, targeted ads that make sense in the moment will help keep players from abandoning the session at the first sign of a commercial, while simultaneously giving brands 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 shown a willingness to experiment with new business models.
Only time will reveal whether this gamble pays off. Historically, many of our gaming‑ad projects have revolved around "watch an ad, earn an extra life" mechanics. 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 indicate how this particular trade‑off will be perceived. Research on ad‑format perception, however, suggests that when participants are asked to describe the format they recall, terms such as "non‑intrusive" and "immersive" consistently rank among the most favorable. If Xbox—and potentially other platforms in the future—are 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 major player to test this approach. 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 pave the way for similar initiatives across the industry and, more importantly, make video games considerably more accessible to everyday gamers.