Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform focused on advertising technology. 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 websites or apps, deceptive messaging, or dismiss buttons that are hard to locate, all of which generate frustration. A recent study by eMarketers highlighted that 52 % of respondents would stop playing if they ran into several intrusive ad elements.
Losing half of an audience at the moment you are trying to engage them is hardly an effective approach. However, advertising does not have to be a negative experience. The same research revealed 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, well‑crafted ads could find a receptive home within the medium.
The argument for a modest ad‑for‑games model is more compelling than many anticipate, especially when we look at the success of linear media. Streaming giants such as Netflix, Disney+ and others have demonstrated that a hybrid model—offering both ad‑free and ad‑supported tiers—can generate substantial revenue while broadening the audience.
Should Xbox’s experiment prove profitable, the company would not only preserve its subscription base but also unlock a fresh, previously untapped income stream at a moment when its finances could benefit from diversification. This is significant because console gaming is increasingly positioned as a premium offering. 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 players. Xbox itself has stated that, when executed correctly, advertising can lower the cost of accessing games.
The mobile gaming sector already shows that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases. Crucially, the system would be optional.
Gamers who prefer an uninterrupted experience could continue to pay a subscription fee, while those who are comfortable with ads could enjoy a reduced‑price or even free entry point. By offering a two‑tier structure, Xbox hopes to keep its loyal fan base while simultaneously making games more approachable for newcomers. Although no concrete survey data on this particular rollout exists yet, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second commercial if it granted them an hour of playtime on a favorite or new title.
Xbox’s own analytics are likely to confirm this hypothesis. Happydemics data from 285 in‑game campaigns across the United Kingdom and North America indicate that in‑game advertisements consistently outperform TV, social and standard online ads in terms of recall and attribution.
Players are more likely to remember an ad they saw while gaming and to correctly associate it with the brand that delivered it. This is where Xbox’s “around‑the‑game” strategy—ads displayed before the game begins rather than embedded within the gameplay—becomes intriguing. Our research shows that pre‑game placements have a distinct advantage for recall and attribution when compared with intrinsic in‑game spots. The distinction matters because, while we can often recollect ads that appear on television or within a scrolling social feed, those memories do not always translate into brand recognition.
Gaming appears to occupy a unique niche where ad recall and brand linkage are especially strong, which likely explains why companies such as Xbox and EA are exploring ad‑based models more aggressively. It is also important to note that Xbox’s ads are not embedded within the gameplay itself; they are shown beforehand. Traditional in‑game formats tend to excel further down the conversion funnel, delivering higher lifts in brand image, consideration, interest and likeability.
A hybrid approach that combines pre‑game and in‑game ads could theoretically offer the best of both worlds for advertisers, though it might also provoke greater resistance from players. Xbox has promised that the ads will be non‑intrusive.
By placing them before the game starts, the company aims to preserve the immersive experience once the player is inside the virtual world. This is a crucial consideration not only for gamers but also for advertisers, who want their messages to complement rather than disrupt the user journey. Relevance will be key. Nobody enjoys seeing an advertisement for cat food when they don’t own a cat, or for a game they have already completed.
Contextual, targeted ads that make sense in the moment will help keep players from abandoning the experience and will give brands a premium platform for reaching 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 fixture. The decision to explore ad‑supported streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has shown a willingness to experiment with new business models.
Whether this gamble pays off remains to be seen. Historically, many of our gaming‑ad initiatives have been built around a "watch an ad, earn an extra life" premise. Xbox is proposing a different exchange: watch an ad to access a game you already own.
Our existing data set does not yet reveal how this proposition will be received. Nevertheless, research on ad‑format perception—where participants who recall an ad are asked to select positive descriptors—has consistently highlighted "non‑intrusive" and "immersive" as top‑rated qualities.
If Xbox and future industry players want advertising in gaming to succeed, these two attributes will be critical metrics to monitor. In my view, Xbox will neither be the first nor the last platform to experiment with this approach.
Advertising has been part of gaming for decades, but it has rarely been designed with the player’s experience at the forefront. Should Xbox manage to strike the right balance, it could pave the way for other companies to follow, ultimately making video games more affordable and accessible to the everyday gamer.