Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform that focuses on advertising technology. 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, often plagued by annoying redirects to external sites or apps, misleading content, and close‑buttons that are difficult to locate. A recent study by eMarketer highlighted that 52 percent of players would stop playing if they encountered several intrusive ad elements.
Losing half of an audience at the very moment you try to engage them is hardly a winning formula. However, advertising does not have to be a negative experience.
The same research revealed that one in five gamers would actually play a title more often if the ads presented were of high quality. This suggests that, when executed well, advertising can complement the gaming experience rather than detract from it. Xbox is currently piloting an ad‑supported game‑streaming service at a time when the overall cost of playing is on an upward trajectory, making the prospect of well‑crafted ads particularly appealing. The argument for a hybrid "ads‑for‑games" model is stronger than many might assume, and it already has a precedent in linear media.
Services such as Netflix, Disney+, and other streaming platforms have demonstrated that offering both ad‑free and ad‑supported tiers can generate significant revenue while expanding the audience base. If Xbox’s experiment proves profitable, it could not only preserve its existing subscriber base but also unlock a previously untapped source of income—something the brand could certainly use given the current market pressures.
Console gaming is increasingly positioning itself as a premium offering. 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 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, allowing them to engage with the medium without a substantial financial commitment. Crucially, this approach would be entirely optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are comfortable with occasional commercials could enjoy a reduced price point. By offering a two‑tier system, Xbox hopes to keep its loyal fan base satisfied while simultaneously making games more approachable for newcomers. Although there is no concrete survey data on this specific announcement yet, it is reasonable to assume that the majority of gamers would tolerate a 30‑second advertisement if it meant they could play a beloved title or a new release for an hour without paying the full price. Xbox likely has internal data that supports this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America indicates that in‑game advertising consistently outperforms television, social media, and other online formats when it comes to ad recall and attribution. Players tend to remember and correctly associate these ads with the brands behind them at a higher rate than ads seen elsewhere. This is where Xbox’s "around‑the‑game" strategy—ads that appear before the game launches rather than within the gameplay itself—becomes compelling.
Our data show that pre‑game placements have a clear advantage in terms of recall and attribution compared with intrinsic in‑game spots. While traditional TV or social ads may be noticed, they often fail to create a strong brand link in the consumer’s mind.
Gaming, on the other hand, seems to occupy a unique position in the advertising ecosystem, which explains why companies like Xbox and EA are increasingly exploring ad‑based models. It is important to note that Xbox’s ads will not be embedded within the gameplay; they will be shown prior to the start of a session. In‑game formats, when they do appear, tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likeability.
A combination of pre‑game and in‑game advertising could theoretically offer the best of both worlds for marketers, but it also risks provoking greater resistance from players who are sensitive to interruptions. Xbox has pledged that any advertisements will be non‑intrusive.
By placing ads before the actual gaming experience begins, the company aims to preserve immersion and avoid breaking the player’s focus. This approach benefits both the audience—who can enjoy an uninterrupted session—and advertisers, who want their messages to be part of a positive experience rather than a disruptive one.
Relevance will be key. No gamer wants to see an ad for cat food when they don’t own a cat, or a promotion for a game they have already completed. Contextual, well‑targeted ads that make sense in the moment will help keep players from abandoning the session while giving brands an effective platform to reach new demographics. Nevertheless, Xbox is navigating 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 willingness by Xbox CEO Asha Sharma to take calculated risks and experiment with new business models. Only time will reveal whether this gamble pays off. Historically, many of our gaming‑ad initiatives have centered on "watch an ad, earn an extra life" mechanics.
Xbox’s proposal is different: players would watch an ad to gain access to a game they already own. Our existing dataset does not yet provide insight into how this will be received. Nonetheless, broader research on ad format perception shows that respondents frequently describe non‑intrusive and immersive ad experiences positively.
If Xbox—and potentially other platforms—aim 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 company to test such a strategy.
Advertising in games has existed for years, but it has rarely been designed with the player’s experience as the primary focus. Should Xbox manage to strike the right balance, it could pave the way for other publishers to adopt similar models, ultimately making video games more affordable and accessible for everyday gamers.