Virginie Chesnais serves as the chief marketing officer at Happydemics, a platform that specializes in ad‑tech analytics. For many years, gamers have looked at in‑game advertising with suspicion, and that wariness is understandable.
The reputation of ads in video games is mixed at best; players often encounter redirects to unrelated websites or apps, misleading content, or tiny close buttons that are difficult to locate, leading to frustration and a sense of intrusion. A recent study conducted by eMarketer highlighted the severity of the problem: more than half of respondents—52 percent—said they would stop playing a title if they were repeatedly bombarded with disruptive advertising features.
Losing half of an audience at the very moment you are trying to engage them is clearly a poor strategic move. Nevertheless, advertising does not have to be synonymous with annoyance.
The same research revealed a more optimistic finding: one in five gamers indicated they would actually increase the frequency with which they played a game if the in‑game advertisements were of a high quality and felt relevant. This suggests that well‑crafted ads can enhance, rather than detract from, the gaming experience. Xbox is currently experimenting with an ad‑supported game‑streaming service, and the broader market context supports the notion that premium‑quality ads could find a receptive home in the gaming ecosystem.
The logic behind offering an ad‑supported tier for games mirrors the successful models already employed by linear media platforms. Services such as Netflix, Disney+, and other major streaming providers have demonstrated that a dual‑revenue approach—combining subscription fees with an ad‑supported option—can be lucrative while also expanding the audience base. If Xbox’s experiment proves profitable, it could not only preserve its existing paying subscriber base but also unlock a fresh, previously untapped revenue stream at a time when the brand is seeking additional financial footing. This development matters because console gaming is increasingly being positioned as a premium service.
The cumulative cost of new releases, hardware upgrades, accessories, and downloadable content (DLC) has risen sharply, creating a financial barrier for the average consumer. When the price tag on a complete gaming experience climbs, many potential players are forced to sit on the sidelines.
Xbox itself has argued that, when executed correctly, advertising can lower the cost of entry for gamers. The mobile gaming sector already provides evidence that ad‑supported tiers can serve as a gateway, allowing players to enjoy games without paying a large upfront fee. By offering a free or low‑cost entry point, developers can attract a larger user base and then monetize that audience through advertising revenue. Crucially, the proposed system is entirely optional.
Players who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads, while those who are price‑sensitive can choose the ad‑supported route. This two‑tier model aims to retain loyal fans while simultaneously making games more accessible to newcomers. Although there is no specific survey data on Xbox’s latest announcement, it is reasonable to assume that most gamers would tolerate a short, 30‑second advertisement if it meant they could play a favorite title or a brand‑new release for an hour without paying. Xbox’s internal data likely supports this hypothesis.
Happydemics has compiled data from 285 in‑game advertising campaigns across the United Kingdom and North America, and the findings consistently show that in‑game ads outperform traditional TV, social media, and online display ads in terms of 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. The distinction between “in‑game” and “around‑the‑game” advertising is also important. Xbox’s strategy leans toward “around‑the‑game” placements—ads that appear before a game session begins, rather than being embedded within the gameplay itself.
Our data indicates that these pre‑game formats generate higher ad recall and stronger brand attribution compared with ads that appear directly inside the game world. Why does this matter? While people can often recall ads they see on television or scrolling through social feeds, they do not always link those impressions to the correct brand.
Gaming, however, appears to create a stronger mental connection between the ad and the advertiser, which explains why companies like Xbox and Electronic Arts (EA) are increasingly exploring ad‑based models. It is also worth noting that Xbox’s ads are not intended to be intrusive. By placing ads before the gameplay starts, the company hopes to preserve the immersive experience that gamers value.
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 a key factor for success. No gamer wants to see an advertisement for cat food when they do not own a cat, or for a game they have already completed.
Contextual, targeted ads that align with a player’s interests will be essential to prevent users from abandoning the session at the first sign of irrelevant content. Xbox is venturing into relatively uncharted territory.
There are two major unknowns: how players will react to a pre‑game ad model, and whether the revenue generated will be sufficient to sustain the approach over the long term. The initiative reflects a willingness by Xbox CEO Asha Sharma to experiment and take calculated risks, but only time will reveal whether the strategy delivers the desired outcomes.
Historically, many of the gaming ad formats we have studied involved a direct trade‑off, such as "watch an ad, earn an extra life." Xbox’s proposal is different: it asks players to watch an ad to access a game they already own. Our existing data set does not yet provide insight into how this particular exchange will be perceived. Nevertheless, broader research on ad format perception shows that when users are asked to describe ad experiences they remember, the adjectives "non‑intrusive" and "immersive" frequently emerge as the most positive descriptors. If Xbox—and potentially other platforms in the future—are to make advertising a sustainable part of gaming, they will need to focus on delivering experiences that feel seamless and integrated rather than disruptive.
Looking ahead, I anticipate that Xbox will not be the first nor the last major console manufacturer to test ad‑supported models. Advertising has been part of the gaming landscape for years, but often without the player’s experience as the central consideration. Should Xbox succeed in balancing revenue generation with a respectful, player‑first approach, it could pave the way for other companies to adopt similar strategies, ultimately making video games more affordable and accessible for everyday gamers.