Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an ad‑tech analytics firm. 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, with frequent complaints about redirects to unrelated sites or apps, misleading content, and hard‑to‑find close buttons that frustrate players. A recent study by eMarketer highlighted that 52 percent of gamers would abandon a session if they encountered several intrusive ad elements.
Losing half of an audience at the moment you’re 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 players would actually increase the frequency with which they play a title if the in‑game ads were of high quality and well‑crafted. With Xbox presently piloting an ad‑supported game‑streaming service, and with the overall cost of playing games on a steady upward trajectory, there is a real opportunity for premium‑grade advertisements to find a comfortable niche within the gaming ecosystem.
The argument for a hybrid "ads‑for‑games" model is more compelling than many assume, especially when we look at the success of linear media platforms. Services such as Netflix, Disney+, and other streaming giants have demonstrated that a consistent, ad‑free tier can coexist profitably alongside a lower‑priced, ad‑supported tier.
Should Xbox’s experiment succeed, it could preserve its subscription base while unlocking a fresh, previously untapped revenue stream—a development the company could certainly use at this juncture. This is significant because console gaming is increasingly being positioned as a premium offering.
The price tags attached to games, consoles, peripherals, and downloadable content keep climbing, making it harder for the average consumer to justify the expense. In effect, a financial barrier is emerging that limits the reach of gaming to a narrower, more affluent audience. Xbox itself has stated that, when executed correctly, advertising can reduce the cost of accessing games.
Mobile gaming already provides a clear precedent: ad‑supported tiers allow players to experience titles without paying large upfront fees, opening the market to a broader demographic. Crucially, any advertising model Xbox adopts would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those willing to tolerate a short commercial break could enjoy a lower‑cost entry point. By offering a two‑tier system, Xbox hopes to keep its loyal fanbase intact while simultaneously lowering the entry barrier for newcomers.
Although no formal survey data exists yet on this particular rollout, it is reasonable to predict that the majority of gamers would tolerate a 30‑second advertisement if it meant gaining an hour of playtime on a favorite or new title. Xbox’s internal data likely supports that 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 when it comes to recall and attribution.
In other words, players are more likely to remember an ad they saw while gaming and correctly associate it with the brand that served it. Xbox’s “around‑the‑game” approach—showing ads before the game launches rather than embedded within the gameplay—adds another layer of advantage.
Our data indicates that pre‑game placements generate higher recall and attribution rates compared with ads that appear directly inside the game world. This distinction matters because, while we can often recall ads seen on TV or scrolling through social feeds, those memories do not always translate into brand recognition. Gaming appears to occupy a unique position in this regard, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based revenue models.
It is essential to note that Xbox’s ads are not in‑game; they are pre‑game. Traditional in‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likability. A blended strategy that combines both pre‑game and in‑game ads could theoretically offer advertisers the best of both worlds, though it also risks provoking greater resistance from players. Xbox has pledged that the advertisements will be non‑intrusive.
By placing them before the gameplay begins, the company aims to avoid breaking the immersive experience that gamers value. This approach benefits both the player—who enjoys an uninterrupted session—and the advertiser, who wants their message to be part of the experience rather than a disruptive interruption. Relevance will be key.
No gamer wants to see an ad for cat food when they don’t own a cat, or an advertisement for a game they have already completed. Contextual, targeted ads that make sense in the moment will help keep players from abandoning the session, while simultaneously giving brands a highly engaged audience. 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. Only time will reveal whether this gamble pays off. Historically, many of our gaming‑ad projects have revolved around "watch an ad, get an extra life" type incentives.
Xbox’s proposal asks players to watch an ad simply to access a game they already own—a scenario that our existing data does not directly address. Nevertheless, broader research on ad‑format perception indicates that when respondents are asked to describe ads they remember, terms like "non‑intrusive" and "immersive" frequently emerge as positive descriptors.
If Xbox—and potentially other platforms in the future—aim to make advertising a viable component of gaming, these two qualities will be critical metrics to monitor. My forecast is that Xbox will neither be the first nor the last to test such a strategy. Advertising has been part of gaming for many years, but rarely with the player’s experience at the forefront.
Should Xbox manage to strike the right balance, it could pave the way for similar initiatives across the industry, ultimately making video games more affordable and accessible for everyday players.