Virginie Chesnais serves as chief marketing officer at Happydemics, a platform that specializes in ad‑tech analytics. For many years, gamers have looked at in‑game advertising with suspicion, and their wariness is not unfounded.
The reputation of ads in the gaming world is mixed at best; players often encounter redirects to unrelated websites or apps, misleading content, and close buttons that are hard to locate, all of which fuel frustration and resentment. A recent study conducted by eMarketer highlighted just how sensitive gamers are to these interruptions.
The research revealed that 52 % of respondents would abandon a game if they were bombarded with multiple disruptive ad elements. Losing more than half of an audience at the moment you are trying to engage them is clearly a flawed approach.
Nevertheless, advertising does not have to be synonymous with annoyance. The same survey indicated that one in five gamers would actually increase the frequency with which they play a title if the in‑game advertisements were of a high quality, relevant, and unobtrusive nature. This suggests that, when executed correctly, ads can enhance rather than detract from the gaming experience.
Xbox is currently piloting an ad‑supported game‑streaming service, and the overall cost of playing video games continues to climb. In this context, premium‑grade advertising could find a welcoming home within the gaming ecosystem. The argument for incorporating an ad‑based revenue model into gaming is more compelling than many industry observers realize, and it is already partially validated by 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 subscription tiers can generate substantial income while still delivering a consistent user experience.
If Xbox’s experiment proves profitable, it could not only preserve its existing subscriber base but also unlock an entirely new revenue stream at a time when the company is eager for fresh sources of cash. This development matters because console gaming is increasingly being positioned as a premium offering. The price tags attached to new consoles, flagship games, accessories, and downloadable content (DLC) have risen dramatically, creating a financial barrier for the average player.
When the cost of entry becomes prohibitive, many potential customers are forced to stay on the sidelines. Xbox itself has argued that, when handled responsibly, advertising can reduce the cost of access to games.
Mobile gaming already provides a clear precedent: ad‑supported tiers allow players to enjoy a game without paying an upfront fee, often in exchange for watching short commercials. This model has opened the door for a broader audience to engage with games they might otherwise never have tried. Importantly, any advertising solution Xbox proposes would be optional. Players who prefer an uninterrupted experience could simply opt for a paid subscription that removes ads.
By offering a two‑tier system—ad‑supported and ad‑free—Xbox hopes to retain its loyal fan base while simultaneously lowering the entry threshold for newcomers. Although there is no published survey data on the specific reaction to Xbox’s announcement, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it meant gaining an hour of gameplay on a beloved or newly released title. Xbox’s internal research likely supports this hypothesis. Happydemics has compiled data from 285 in‑game advertising campaigns across the United Kingdom and North America.
The findings consistently show that in‑game ads outperform traditional TV, social media, and online banner ads when it comes to recall and attribution. In other words, players are more likely to remember an ad they saw while gaming and to correctly associate it with the sponsoring brand.
This is where Xbox’s “around‑the‑game” strategy becomes intriguing. Rather than embedding ads directly within the gameplay, Xbox plans to place advertisements before the game launches—similar to a pre‑roll video on a streaming platform. Our data indicate that these pre‑game placements generate higher ad recall and stronger brand attribution compared with ads that appear inside the game environment. The distinction matters because, while we can often remember a commercial that flashes on a television screen or a sponsored post in a social feed, that memory does not always translate into a clear brand connection.
Gaming, by contrast, appears to be in a league of its own regarding the strength of that link, which likely explains why companies such as Xbox and Electronic Arts (EA) are increasingly exploring ad‑based gaming models. It is essential to note that Xbox’s ads are not meant to be in‑game interruptions; they are pre‑game experiences. Traditional in‑game ad formats 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 give advertisers the best of both worlds, but it also raises the risk of player pushback if the balance tips too far toward intrusiveness. Xbox has emphasized that the advertisements will be non‑intrusive.
By delivering ads before the gameplay begins, the company aims to preserve the immersive nature of the gaming session. This approach benefits both players—who enjoy an uninterrupted experience—and advertisers, who want their messages to be part of the experience rather than a disruptive nuisance. Relevance will be another crucial factor.
Nobody wants to see an advertisement for cat food when they don’t own a cat, or a promo for a game they have already completed. By ensuring that ads are contextually appropriate and tied to the player’s interests, Xbox can mitigate the risk of users abandoning the session at the first sign of an irrelevant commercial, while simultaneously providing brands with a highly targeted platform.
Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how gamers will react to pre‑game advertising on a large scale.
The second unknown 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 strategic move by Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with innovative ideas. Whether this gamble will pay off remains to be seen.
Historically, many of the gaming‑related ad campaigns we have worked on have been based on a “watch an ad, earn an extra life” premise. Xbox’s proposition 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 perceived.
However, broader research on ad format perception shows that when participants are asked to describe ad experiences using positive adjectives, terms such as “non‑intrusive” and “immersive” consistently rank among the top choices. If Xbox—and any future adopters—aim to make advertising a sustainable component of gaming, these two attributes will need to be carefully monitored and optimized. In my view, Xbox will neither be the first nor the last company to trial this kind of model.
Advertising in games has existed for decades, but it has rarely been designed with the player’s experience at the forefront. Should Xbox succeed in delivering ads that feel natural, relevant, and optional, it could set a precedent that encourages other game publishers to adopt similar strategies, ultimately making video games more affordable and accessible for everyday gamers.