Virginie Chesnais serves as Chief Marketing Officer at the ad‑technology analytics firm Happydemics. For many years, gamers have viewed in‑game advertising with suspicion, and their wariness is understandable.
The reputation of ads in video games is mixed at best; players often encounter redirects to unrelated websites or apps, deceptive messaging, or frustratingly hidden close buttons, all of which degrade the experience. A recent study conducted by eMarketer highlighted that 52 percent of respondents would abandon a game after encountering several intrusive ad elements. Losing half of an audience at the moment you are trying to engage them is hardly a winning strategy. Nevertheless, advertising does not have to be a detriment.
The same research revealed that one in five gamers would actually increase the frequency with which they played a title if the in‑game ads were of high quality and relevance. This suggests that, when executed correctly, ads can enhance rather than diminish enjoyment. Xbox is currently piloting an ad‑supported game‑streaming service, and the overall cost of gaming continues to climb.
In this environment, well‑crafted advertisements could find a receptive home within the gaming ecosystem. The rationale for introducing an "ads‑for‑games" model is more compelling than many anticipate, and it has already been demonstrated to some extent by linear media. Services such as Netflix, Disney+, and other streaming platforms have shown that offering both ad‑free and ad‑supported tiers can generate substantial revenue while expanding the audience base. Should Xbox’s experiment succeed, the company would not only preserve its subscription‑based revenue stream but also unlock a fresh, previously untapped source of income—a development that could be crucial at a time when the brand is seeking new growth avenues.
This issue matters because console gaming is increasingly positioned as a premium offering. Prices for games, hardware, accessories, and downloadable content are all rising, creating a financial hurdle for the average player. Xbox itself has acknowledged that, when implemented thoughtfully, advertising can lower the barrier to entry and make gaming more affordable.
Mobile gaming already provides a clear precedent: ad‑supported tiers allow players to access titles without paying large upfront fees, relying instead on short commercial breaks. Translating that model to consoles could open a similar pathway for newcomers who might otherwise be priced out. Importantly, participation would remain optional. Gamers who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those willing to tolerate a brief commercial could enjoy the same content for free or at a reduced cost.
By offering a dual‑track system, Xbox aims to retain its loyal fanbase while simultaneously attracting a broader, cost‑conscious audience. Although formal survey data on this specific initiative are not yet available, it is reasonable to assume that a large majority of players would accept a 30‑second advertisement in exchange for an hour of gameplay on a favorite or new title.
Xbox’s own analytics are likely to confirm this hypothesis. Happydemics’ research, which examined 285 in‑game campaigns across the United Kingdom and North America, shows that in‑game advertisements consistently outperform traditional TV, social, and online ads in terms of recall and attribution.
Players are more likely to remember an ad they saw while gaming and correctly associate it with the sponsoring brand. The distinction between "around‑the‑game" ads—those displayed before a session begins—and ads embedded directly within the gameplay is crucial. Our data indicate that pre‑game placements enjoy a clear advantage in recall and attribution compared with intrinsic in‑game slots.
This suggests that Xbox’s strategy of showing ads outside the actual game environment could be especially effective. Why does this matter?
While consumers may recall commercials seen on television or scrolling through social feeds, they do not always link those impressions to specific brands. Gaming appears to occupy a unique niche where ad recall translates more directly into brand association, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based monetisation models. It is also worth noting that Xbox’s ads are intended to appear before the game starts, not during the gameplay itself.
In‑game ad formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likeability. A hybrid approach—combining pre‑game and in‑game ads—could theoretically provide advertisers with the best of both worlds, though it might also provoke greater resistance from players who value uninterrupted immersion.
Xbox has pledged that its advertisements will be non‑intrusive. By placing commercials ahead of the gaming session, the company aims to preserve the immersive experience once the player is inside the virtual world. This approach benefits both the gamer, who avoids mid‑session interruptions, and the advertiser, whose message becomes part of a seamless entry point rather than a disruptive interruption. Relevance will be key.
No player wants to see an ad for cat food when they have no feline companion, or an advertisement for a game they have already completed. Contextual, targeted ads that make sense for the individual user will help prevent players from abandoning the experience at the first sign of an irrelevant commercial, while simultaneously giving brands a highly engaged audience. Nevertheless, Xbox is venturing into largely uncharted territory. The company must gauge how players will react to this new format and determine whether the revenue generated will justify making ad‑supported streaming a permanent feature.
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 innovative business models. Whether this gamble pays off remains to be seen. Historically, many gaming ad campaigns have followed a "watch an ad, earn an extra life" model.
Xbox’s proposition differs: it asks players to watch an ad to access a game they already own. Our existing data set does not yet reveal how this particular trade‑off will be received.
Research on ad format perception shows that when participants are asked to describe the formats they remember, terms such as "non‑intrusive" and "immersive" rank among the most positive descriptors. If Xbox—and potentially other platforms in the future—wish to make gaming ads a sustainable revenue stream, they will need to focus closely on delivering experiences that align with these attributes. My forecast is that Xbox will neither be the first nor the last company to test this approach. Advertising has been part of gaming for years, but it has rarely been designed with the player’s experience at the forefront.
Should Xbox succeed in marrying relevance, non‑intrusiveness, and optionality, it could pave the way for other developers and publishers to adopt similar models, ultimately making video games more accessible to the everyday gamer.