Virginie Chesnais serves as Chief Marketing Officer at the ad‑tech analytics firm Happydemics. For years, many gamers have approached in‑game advertising with suspicion, and their concerns are understandable. The reputation of ads in video games is mixed at best, with common grievances including redirects to unrelated sites or apps, misleading content, and the absence of an easy‑to‑find close button. A recent study by eMarketer highlighted that 52 % of players would abandon a session if they encountered multiple intrusive ad elements.
Losing half of your audience the moment you try to engage them is hardly an effective tactic. However, advertising does not have to be a negative experience. The same research indicated that one in five gamers would actually increase the frequency with which they play a title if the in‑game advertisements were of high quality and relevance.
With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, premium‑grade ads could find a welcoming home within the ecosystem. The rationale for a gaming‑focused ad model is more compelling than it might first appear, and it has already been demonstrated in the world of linear media. Services such as Netflix, Disney+, and other streaming platforms have proven that a hybrid approach—offering both ad‑free and ad‑supported tiers—can generate substantial revenue while keeping a broad audience engaged.
Should Xbox’s experiment succeed, it would not only preserve its subscription‑based revenue stream but also unlock a brand‑new, previously untapped source of income at a moment when the company could use it most. This issue matters because console gaming is increasingly being positioned as a premium service.
Prices for games, consoles, accessories, and downloadable content have risen sharply, creating a financial hurdle for the average player and limiting the market’s growth. Xbox itself has stated that, when executed correctly, advertising can help lower the barrier to entry for gamers. Mobile gaming already provides a clear illustration of this principle: ad‑supported tiers enable players to experience a game without the need for a large upfront payment, thereby expanding the overall user base. Crucially, any ad‑based option would be entirely optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those who are willing to view ads could enjoy the same content at a reduced cost. By offering a two‑tier system, Xbox hopes to retain its dedicated fanbase while simultaneously making games more accessible to newcomers. Although there is no specific survey data on this latest Xbox announcement, it is reasonable to assume that the majority of gamers would tolerate a 30‑second commercial if it granted them an hour of gameplay in a beloved or new title. Xbox’s internal analytics are likely to confirm this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertisements consistently out‑perform television, social media, and other online formats when it comes to ad 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. This is where Xbox’s “around‑the‑game” strategy—placing ads just before the game launches rather than embedding them within the gameplay—becomes particularly interesting. Our data indicate that these pre‑game placements achieve higher recall and attribution scores compared with ads that appear directly inside the game world.
The distinction matters because, while we can often recall ads we see on TV or scrolling through a feed, we do not always link those impressions to the corresponding brands. Gaming appears to operate in its own league for this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based revenue models.
It is important to note that Xbox’s ads are not intended to interrupt the actual gameplay; they will appear before the session begins. In‑game ad formats, by contrast, tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likeability. A hybrid approach—combining both pre‑game and in‑game ads—could offer advertisers the best of both worlds, but it also runs the risk of generating greater pushback from players if not handled delicately.
Xbox has pledged that the ads will be non‑intrusive. By delivering commercials before the game starts, the company aims to preserve the immersive experience that gamers value. This approach benefits both the player, who enjoys an uninterrupted session, and the advertiser, whose message becomes part of the overall experience rather than a disruptive interruption.
Relevance will be key. Nobody wants to see a promotion for cat food when they don’t own a cat, or an advertisement for a game they have already completed.
By ensuring that ads are contextually appropriate and provide a clear rationale for their placement, Xbox can keep players from abandoning the service while giving brands an effective platform to reach new audiences. Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how players will react to these pre‑game commercials; the second is whether the revenue generated will be sufficient to justify a long‑term commitment to the model.
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. Whether this gamble pays off remains to be seen.
Historically, many gaming ad initiatives have followed a “watch an ad, earn an extra life” structure. Xbox’s proposal is different: it asks players to watch an ad in order to access a game they already own. Our existing data set does not yet reveal how this particular exchange will be received. Nevertheless, broader research on ad‑format perception shows that respondents most frequently associate non‑intrusive and immersive experiences with positive descriptors.
If Xbox—and potentially other platforms—aim to make advertising a lasting component of gaming, these two attributes will be essential metrics to monitor. My forecast is that Xbox will neither be the first nor the last company to test such a strategy.
Advertising has been part of gaming for many years, but it has rarely been designed with the player’s experience at its core. Should Xbox succeed in delivering ads that feel seamless and optional, it could pave the way for other developers and publishers to adopt similar models, ultimately making video games more affordable and reachable for the everyday gamer.