Virginie Chesnais serves as the chief marketing officer at Happydemics, an ad‑tech analytics firm. For many years, gamers have viewed in‑game advertising with suspicion, and that wariness is understandable. The reputation of ads in video games is mixed at best; players often encounter redirects to unrelated sites or apps, deceptive messaging, or hide‑away close buttons that are difficult to locate, all of which generate frustration. A recent study conducted by eMarketer revealed that 52 percent of gamers would abandon a session if they ran into multiple intrusive ad elements.
Losing half of an audience at the very moment you are trying to engage them is hardly an effective approach. However, advertisements do not have to be inherently negative. The same research indicated that one in five gamers would actually increase the frequency with which they play a title if the in‑game ads were of a high standard. With Xbox presently piloting an ad‑supported game‑streaming service and the overall cost of playing continuing to climb, well‑crafted ads could find a welcoming niche within the gaming ecosystem.
The argument for a modest advertising model in games 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 offering both ad‑free and ad‑supported tiers can generate substantial revenue while keeping a broad subscriber base.
Should Xbox’s experiment succeed, it would not only preserve revenue from existing subscription customers but also unlock a completely new, previously untapped source of income—a crucial development at a time when the brand is seeking fresh financial streams. This issue is significant because console gaming is increasingly being positioned as a premium experience. Prices for games, consoles, accessories, and downloadable content have risen steadily, making it harder for the average consumer to justify the expense.
In Xbox’s own announcement, the company noted that, when executed correctly, advertising could lower the barrier to entry for gamers. Mobile gaming has already shown 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 satisfied while simultaneously expanding accessibility for newcomers. Although there is currently no published survey data on this particular rollout, it is reasonable to bet that a large majority of gamers would tolerate a 30‑second commercial if it granted them an hour of gameplay in a beloved or newly released title.
Xbox likely has internal data that supports this assumption. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America demonstrates that in‑game advertisements consistently outperform television, social media, and other online formats when it comes to ad recall and attribution.
Players are more likely to remember an ad they saw while gaming and to correctly associate it with the sponsoring brand. Xbox’s “around‑the‑game” strategy—placing ads just before the game launches rather than embedding them within the gameplay itself—adds another layer of intrigue.
Our data show that these pre‑game placements achieve a distinct advantage in recall and attribution compared with intrinsic in‑game spots. This matters because, while we may recall ads that appear during a TV show or while scrolling through a feed, that recall does not always translate into a clear brand link. Gaming appears to operate in a league of its own for this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based models.
It is crucial to note that Xbox’s ads are not woven into the game world; they are shown beforehand. Traditional in‑game formats tend to excel later in the marketing funnel, driving higher brand‑image uplift, consideration, interest, and likeability. A hybrid approach that combines pre‑game and in‑game ads could theoretically deliver the best of both worlds for advertisers, though it might also provoke greater resistance from players.
Xbox has pledged that the advertisements will be non‑intrusive. By positioning ads before the gameplay begins, the company aims to preserve the immersive experience that gamers value. This consideration benefits both the player—who avoids interruptions during play—and the advertiser, who wants their message to be part of a seamless experience rather than a disruptive interruption.
Relevance will be key. No one wants to see an ad for cat food when they don’t own a cat, or a promotion for a game they have already completed.
By delivering contextual, purposeful ads, Xbox can keep players from abandoning the session while providing brands with a premium platform to reach fresh audiences. Nevertheless, Xbox is venturing into largely uncharted territory.
First, it must gauge how players will react to the presence of ads; second, it must determine whether the revenue generated will justify making the model a permanent feature. The move 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 gaming ad campaigns have been built around “watch an ad, earn an extra life” mechanics. 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 indicate how this will be received. Related research on ad‑format perception—where participants recall an ad and then select descriptive adjectives—has consistently highlighted “non‑intrusive” and “immersive” as top descriptors.
Should Xbox and future adopters wish to make gaming ads a lasting success, these two attributes will be essential metrics to monitor. In my view, Xbox will neither be the first nor the last platform to experiment with this approach.
Advertising has existed in gaming for years, but rarely with the player’s experience as the central focus. If Xbox can perfect the balance, it could pave the way for other companies to follow, ultimately making video games more affordable and accessible for everyday gamers.