Virginie Chesnais serves as the chief marketing officer at Happydemics, an ad‑tech analytics firm. For many years, gamers have looked at in‑game advertising with suspicion, and their wariness is understandable.
The reputation of ads in video games is mixed; players often encounter redirects to unrelated websites or apps, misleading content, or obscure close buttons that make dismissing an ad frustrating. A recent study by eMarketers revealed that 52 percent of gamers would stop playing if they ran into several intrusive advertising elements. Losing half of your audience at the moment you’re trying to engage them is hardly an effective approach.
However, advertising does not have to be a negative experience. The same survey indicated that one in five gamers would actually increase the frequency with which they play a title if the in‑game ads were of high quality and relevance. With Xbox currently piloting a new ad‑supported game‑streaming service and the overall cost of playing games continuing to climb, well‑crafted advertisements could find a welcoming niche within the gaming ecosystem. The argument for introducing an ad‑for‑games model is more compelling than many assume, and it has already been partially validated by traditional linear media.
Platforms such as Netflix, Disney+, and other streaming services have demonstrated that offering both ad‑free and ad‑supported tiers can generate substantial revenue while keeping a broad subscriber base. If Xbox’s experiment proves profitable, the company could not only preserve its paying subscribers but also unlock an entirely new revenue stream—a development the brand urgently needs. This is significant because console gaming is increasingly being positioned as a premium service. Prices for games, consoles, accessories, and downloadable content keep rising, making it harder for the average consumer to justify the expense and creating a barrier for casual gamers.
Xbox itself has stated that, when executed correctly, advertising can lower the cost of entry into gaming. Mobile gaming already shows that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases. 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 hopes to keep its loyal fan base while simultaneously expanding access for newcomers. Although there is no concrete survey data on this specific launch yet, it is reasonable to assume that most gamers would tolerate a 30‑second commercial if it meant they could play a favorite or new title for an hour without paying extra.
Happydemics data covering 285 in‑game campaigns across the United Kingdom and North America show that in‑game advertisements consistently outshine 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 brand that displayed it. This advantage becomes even clearer when we examine "around‑the‑game" placements—ads shown before the game starts rather than embedded within gameplay.
Our research indicates that these pre‑game formats generate higher recall and attribution scores compared with intrinsic in‑game placements. Why does this matter? While we can recall ads that appear on television or in a social‑media feed, we do not always link them to the sponsoring brand. Gaming appears to operate in a different league for this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based models.
It is essential to note, however, that Xbox’s ads are pre‑game, not embedded within 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 that combines both pre‑game and in‑game ads could offer advertisers the best of both worlds, though it might also provoke greater resistance from players. Xbox has pledged that its advertisements will not be intrusive.
By placing ads before the gaming session begins, the company aims to preserve the immersive experience once the player is inside the virtual world. This strategy benefits both gamers—who avoid interruptions during play—and advertisers, who want their messages to complement rather than disrupt the experience. Relevance will be key. No one wants to see an ad for cat food if they don’t own a cat, or a promotion for a game they have already completed.
Contextual, well‑targeted ads can keep players from abandoning a session at the sight of an irrelevant commercial, while giving brands a premium platform to reach fresh audiences. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to this new ad format; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The move toward ad‑supported streaming reflects the boldness of Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment and take calculated risks. Only time will reveal whether this strategy pays off.
Historically, our work in gaming advertising has focused on "watch an ad, earn an extra life" type incentives. Xbox’s proposal—watch an ad to access a game you already own—represents a different trade‑off, and our existing data set does not yet indicate how players will respond.
However, broader research on ad format perception shows that descriptors such as "non‑intrusive" and "immersive" rank among the most positively received. If Xbox and future adopters aim to make gaming ads successful, these two attributes will be crucial metrics to monitor. My forecast is that Xbox will neither be the first nor the last platform to test such a model. Advertising in games has existed for years, but rarely with the player experience at the forefront.
Should Xbox manage to strike the right balance, it could pave the way for other gaming companies to follow, ultimately making video games more affordable and accessible for everyday players.