Virginie Chesnais serves as Chief Marketing Officer at the ad‑technology analytics firm Happydemics. She has long observed that gamers tend to be skeptical of advertisements that appear within games, and that wariness is not unfounded. The reputation of in‑game ads is mixed at best: many users complain about redirects to unrelated sites or apps, misleading content, and the difficulty of locating a close button, all of which contribute to a frustrating experience. A recent study conducted by eMarketer highlighted this sentiment, revealing that 52 % of respondents would abandon a game if they encountered multiple disruptive 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 high quality and well‑executed. In other words, good advertising can enhance, rather than detract from, the gaming experience.
Xbox is currently experimenting with an ad‑supported game‑streaming service at a time when the overall cost of playing is climbing steadily. This creates a fertile environment for premium, non‑intrusive ads to find a welcoming home within the gaming ecosystem. The rationale for introducing an ad‑based model in gaming is more compelling than many assume, and it is already validated to some extent by the success of linear media. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that offering an ad‑supported tier can generate significant revenue while still delivering a reliable service.
Should Xbox’s experiment prove viable, it would not only preserve its existing subscription base but also unlock a completely new revenue stream—something the brand could certainly use given its recent financial pressures. This development matters because console gaming is increasingly being positioned as a premium offering. The price tags attached to new consoles, games, accessories, and downloadable content are growing, making it harder for the average consumer to justify the expense.
In effect, cost is becoming a barrier that keeps many potential players at the door. Xbox itself has stated that, when executed correctly, advertising can help lower the cost of 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.
By offering a similar option on consoles, Xbox could broaden its audience without alienating those who prefer an ad‑free experience. Crucially, this model would be entirely optional.
Players who wish to avoid ads could continue to do so by paying a subscription fee, while those who are comfortable with occasional commercials could enjoy a reduced price point. This two‑tier approach aims to retain loyal fans while simultaneously making games more accessible to newcomers. Although there is no concrete survey data on this specific announcement yet, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it meant they could play a favorite title or a brand‑new game for an hour without paying the full price.
Xbox likely has internal data that supports this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertising consistently outperforms television, social media, and other online formats when it comes to ad recall and attribution. In other words, players are more likely to remember and correctly associate the brand with the ad they saw while gaming. Xbox’s “around‑the‑game” strategy—placing ads before the gameplay begins rather than embedding them within the game world—adds another layer of interest.
Our data indicate that these pre‑game placements achieve higher recall and attribution scores compared with intrinsic in‑game placements. While traditional TV or social ads might be memorable, they do not always translate into a clear brand connection.
Gaming, by contrast, appears to excel in this metric, which explains why companies like Xbox and EA are increasingly exploring ad‑based monetisation models. It is important to note that Xbox’s ads are not meant to interrupt the actual gameplay; they will appear before the session starts.
In‑game ad formats, on the other hand, tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability. A hybrid approach that combines both pre‑game and in‑game ads could theoretically provide the best of both worlds for advertisers, though it also risks provoking greater pushback from players.
Xbox has promised that the advertisements will be non‑intrusive, which is a straightforward concept: ads that run before the game begins will not break immersion. This is a win‑win for both gamers, who retain a seamless experience, and advertisers, who want their messages to be part of the experience rather than a nuisance. Relevance will be key. No player wants to see an ad 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 being shown, Xbox can minimise the risk of users abandoning the service while offering brands a highly effective platform to reach fresh audiences. Nevertheless, Xbox is venturing into largely uncharted territory. First, it must gauge how players will react to pre‑game advertisements; second, it must determine whether the ad revenue generated will be sufficient to sustain the model over the long term. The decision to explore ad‑supported 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 campaigns have relied on a “watch an ad, earn an extra life” mechanic.
Xbox’s proposal differs: 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 formats they remember positively, terms like “non‑intrusive” and “immersive” frequently emerge as top descriptors.
If Xbox—and potentially other platforms in the future—aim to make advertising a lasting part of gaming, these two attributes will be essential to monitor closely. My forecast is that Xbox will neither be the first nor the last company to trial this approach.
Advertising has existed in gaming for many years, but it has not always been implemented with the player’s experience at the forefront. Should Xbox succeed in balancing revenue generation with a respectful, player‑centric ad experience, it could pave the way for other developers and publishers to adopt similar models, ultimately making video games more affordable and accessible for the everyday gamer.