Virginie Chesnais serves as Chief Marketing Officer at the ad‑technology analytics firm Happydemics. For years, many gamers have been skeptical about the presence of advertisements within video games, and their concerns are not unfounded.
The reputation of in‑game ads is mixed at best; players often encounter redirects to unrelated websites or apps, misleading content, or hidden close buttons that are difficult to locate, leading to frustration and annoyance. A recent study conducted by eMarketer highlighted that 52 % of gamers would abandon a title if they were repeatedly exposed to disruptive advertising elements. Losing half of the audience at the moment you are trying to engage them is clearly not an effective approach. However, advertisements do not have to be a negative experience.
The same research revealed that one in five gamers would actually increase the frequency with which they play a game if the in‑game ads were of high quality and relevance. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of playing games continuing to climb, well‑crafted ads could find a welcoming niche within the gaming ecosystem. The argument for incorporating an ad‑for‑games model is stronger than many assume, a notion that has already been demonstrated in linear media.
Services such as Netflix, Disney+, and other streaming platforms have shown that a tiered offering—combining a paid, ad‑free option with a lower‑cost, ad‑supported tier—can generate substantial revenue while expanding the audience base. Should Xbox’s experiment prove successful, it could not only preserve its subscriber base but also unlock a brand‑new, previously untapped source of income at a moment when the company is eager for additional cash flow. This development matters because console gaming is increasingly positioned as a premium product. The price tags attached to new consoles, full‑price games, accessories, and downloadable content (DLC) are rising, making it harder for the average consumer to justify the expense.
Consequently, many potential players are being excluded from the market. Xbox itself has acknowledged that, when executed correctly, advertising can lower the barrier to entry for gamers.
Mobile gaming already provides a clear example: ad‑supported tiers allow players to experience games without paying large upfront fees, often in exchange for watching short video ads. Importantly, the model remains optional. Players who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads.
By offering a two‑tier system, Xbox aims to keep its loyal fan base satisfied while simultaneously opening the door for newcomers who might be deterred by high costs. Although there is no specific survey data on this particular announcement yet, it is reasonable to assume that a large majority of gamers would be willing to sit through a 30‑second advertisement if it meant gaining an hour of gameplay on a beloved or brand‑new title. Xbox’s internal research is likely to confirm this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America indicates that in‑game advertisements consistently outperform television, social media, and other online formats in terms of recall and attribution. Players tend to remember and correctly associate these ads with the brands that served them at a higher rate than with ads encountered elsewhere. This is where Xbox’s “around‑the‑game” strategy—ads displayed before the game loads rather than embedded within the gameplay—becomes intriguing.
Our data show that pre‑game placements generate a clear advantage in recall and attribution when compared with intrinsic in‑game placements. The distinction matters because, while we may recall a commercial seen on TV or a banner on a social feed, we do not always link that memory to the specific brand.
Gaming appears to occupy a unique position in the advertising landscape, delivering stronger brand‑linkage metrics. This likely explains why Xbox and other publishers such as Electronic Arts are increasingly exploring ad‑based revenue 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, on the other hand, tend to excel further down the conversion funnel, delivering higher lifts in brand image, consideration, interest, and overall likability. A hybrid approach—combining pre‑game and in‑game ads—could theoretically offer the best of both worlds for advertisers, though it may also provoke greater resistance from players. Xbox has promised that the ads will be non‑intrusive.
By placing them before the game starts, the company aims to preserve the immersive experience that gamers value. This approach benefits both the audience, who can enjoy uninterrupted play, and advertisers, who want their messages to feel like a natural part of the experience rather than a disruptive interruption. Relevance will be key. No player wants to see an ad for cat food if they don’t own a cat, or for a game they have already completed.
Contextual, targeted advertising that respects the player’s interests will help prevent users from abandoning the session the moment an ad appears, while also providing brands with a highly effective platform to reach new demographics. Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how gamers 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 demonstrated a willingness to experiment with new business models.
Only time will reveal whether this strategy pays off. Historically, many gaming ad campaigns have relied on “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 current data set does not provide a clear answer on how this will be received. Nevertheless, broader research on ad‑format perception shows that when participants are asked to describe the most appealing qualities of an ad, terms such as “non‑intrusive” and “immersive” consistently rank at the top. If Xbox—and potentially other platforms in the future—wish to make gaming ads a lasting success, these two attributes will be crucial performance indicators.
My forecast is that Xbox will neither be the first nor the last company to test this approach. Advertising in video games has existed for decades, 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 similar initiatives across the industry and, more importantly, make video games considerably more accessible to everyday gamers.