Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have been skeptical about the presence of advertisements within games, and their concerns are not unfounded. The reputation of in‑game ads is mixed at best, with common complaints ranging from redirects to unrelated websites or applications, misleading content, and the frustration of trying to locate a tiny close button that often seems hidden. A recent study conducted by eMarketer highlighted that 52 % of respondents would abandon a game if they encountered multiple intrusive ad elements.
Losing half of your audience at the moment you are trying to engage them is hardly an effective approach. However, advertisements do not have to be synonymous with a negative experience. The same research indicated that one in five gamers would actually play a title more often if the in‑game ads 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 welcoming niche within the medium. The argument for a hybrid "ads‑for‑games" model is more compelling than it may first appear, a notion that has already been demonstrated in the world of linear media.
Services such as Netflix, Disney+, and other streaming platforms have proven that offering both ad‑free and ad‑supported tiers can generate substantial revenue while keeping a broad audience base. Should Xbox’s experiment succeed, it would not only preserve the paying subscriber pool but also unlock a previously untapped source of income at a moment when the brand is seeking fresh cash streams. This development matters because console gaming is increasingly being positioned as a premium offering. The price tags attached to new consoles, full‑price games, accessories, and downloadable content (DLC) are growing, making it harder for the average consumer to justify the expense.
These rising costs create a barrier that keeps many potential players on the sidelines. Xbox itself has argued that, when executed correctly, advertising can lower the financial barrier to entry.
The mobile‑gaming sector already demonstrates how ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases. By allowing gamers to access content for free—or at a reduced cost—in exchange for watching short commercials, the industry can broaden its reach. Crucially, this model would remain optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads. By offering a two‑tier system, Xbox hopes to retain its loyal fan base while simultaneously making games more attainable for newcomers.
Although we lack specific survey data on Xbox’s latest announcement, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second ad if it meant they could play a beloved title or try out a new release for an hour. Xbox’s internal research likely supports this hypothesis. Data from Happydemics covering 285 in‑game campaigns across the United Kingdom and North America reveal that in‑game advertisements consistently outperform television, social media, and other online formats when it comes to recall and attribution.
In other words, players are more likely to remember an ad they see while gaming and correctly associate it with the brand that displayed it. Xbox’s "around‑the‑game" strategy—showing ads before the gameplay begins rather than embedding them within the game world—adds another layer of intrigue. Our findings show that these pre‑game placements have a clear advantage in terms of recall and attribution when compared with ads that appear directly inside the game environment.
The distinction matters because, while we may remember a commercial that pops up while watching TV or scrolling through a feed, that memory does not always translate into a clear brand connection. Gaming appears to occupy a unique space where ad exposure more readily translates into brand awareness, which likely 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 embedded within the gameplay itself; they are displayed prior to the start of a session.
Traditional in‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability. A blended approach—combining pre‑game and in‑game ads—could theoretically provide advertisers with the best of both worlds, though it also raises the risk of heightened player pushback.
Xbox has pledged that the ads will be non‑intrusive. By placing commercials before the game launches, the company aims to preserve the immersive experience once play begins. This consideration is vital not only for the player experience but also for advertisers, who want their messages to feel like a natural part of the journey rather than a disruptive interruption. Relevance will be another key factor.
No gamer wants to see 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 for the individual player will help prevent churn and give brands a premium platform to reach new audiences. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to the presence of ads, and the second is whether the 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. Only time will reveal whether this gamble pays off.
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 to access a game they already own. Our existing data set does not yet indicate how this particular trade‑off will be received.
However, research on ad format perception—where participants who recall an ad are asked to describe the experience—has consistently highlighted "non‑intrusive" and "immersive" as top‑rated descriptors. If Xbox and future industry players aim to make advertising a permanent fixture in gaming, these two attributes will be essential metrics to monitor. My forecast is that Xbox will neither be the first nor the last platform to trial such a strategy. Advertising in games has existed for years, but it has rarely been designed with the player’s experience at its core.
Should Xbox succeed in balancing revenue generation with a seamless, optional ad experience, it could pave the way for other publishers to follow, ultimately making video games more affordable and accessible for the everyday gamer.