Virginie Chesnais serves as chief marketing officer at the ad‑technology analytics firm Happydemics. For years, many gamers have viewed in‑game advertising with suspicion, and their concerns are not unfounded.
The reputation of ads within video games is mixed; players often encounter redirects to unrelated websites or apps, misleading creative, or dismiss buttons that are difficult to locate, all of which generate frustration. A recent study by eMarketer highlighted that 52 % of gamers would abandon a session if they ran into several intrusive ad elements. Losing half of your 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 players would actually increase the frequency with which they play a title if the in‑game ads were of a high quality and felt relevant.
With Xbox presently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, well‑crafted ads could find a receptive home in the console ecosystem. The argument for introducing a modest advertising model into gaming is stronger than many anticipate, and it is already partially validated by the success of linear media. Services such as Netflix, Disney+ and other streaming platforms have demonstrated that a mixed‑model—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 income stream at a moment when the brand is in need of fresh cash flow. This development matters 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 or budget‑conscious gamers.
Xbox itself has stated that, when executed correctly, advertising can help lower the cost of accessing games. The mobile‑gaming sector already shows that ad‑supported tiers can serve as an entry point for players who do not want—or cannot afford—to make large upfront purchases.
Crucially, participation would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are comfortable with occasional commercials could enjoy a reduced‑price or free tier.
By offering a two‑tier system, Xbox hopes to retain its loyal fan base while simultaneously making games more approachable for newcomers. Although no formal survey data on Xbox’s new model has been released yet, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it meant gaining an hour of playtime on a beloved or new title. Xbox’s internal analytics are likely to confirm this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America indicates that in‑game advertising consistently outperforms TV, social and other online formats in terms of recall and attribution. Players tend to remember ads that appear within a gaming environment and correctly associate them with the sponsoring brand.
Xbox’s “around‑the‑game” approach—where ads are displayed before the gameplay begins rather than embedded within the experience—adds another layer of intrigue. Our data suggest that pre‑game placements generate higher recall and attribution scores compared with intrinsic in‑game spots. The distinction matters because while we can recall ads seen on television or scrolling through a social feed, that recall does not always translate into a clear brand connection. Gaming appears to occupy a unique space where both recall and brand linkage are strong, which likely explains why companies such as Xbox and EA are increasingly exploring ad‑based models.
It is essential to note that Xbox’s ads are not meant to interrupt the actual gameplay; they will appear before the game launches. Traditional in‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likeability. A hybrid model that combines pre‑game and in‑game ads could theoretically give advertisers the best of both worlds, though it also risks provoking greater pushback from players who value uninterrupted immersion. Xbox has pledged that the ads will be non‑intrusive.
By placing commercials before the gaming session starts, the company aims to preserve the immersive quality of the experience. This approach benefits both gamers—who avoid interruptions mid‑play—and advertisers, who want their messages to be part of the experience rather than a disturbance. Relevance will be key. Nobody wants to see an advertisement for cat food if they don’t own a cat, or a promotion for a game they have already completed.
By delivering contextual, audience‑matched ads, Xbox can keep players from abandoning the session while giving brands an effective platform to reach new consumers. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to a new ad format; 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 the boldness of Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment and take calculated risks. Only time will reveal whether this strategy pays off. Historically, our work in gaming advertising has focused on “watch an ad, earn an extra life” mechanics.
Xbox’s proposition differs: players would 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 shows that when respondents are asked to describe ads they remember, terms such as “non‑intrusive” and “immersive” rank among the most positive descriptors.
Should Xbox—and potentially other platforms—aim to make gaming ads successful, these two attributes will be critical performance indicators. In my view, Xbox will neither be the first nor the last major player to test this model. Advertising within video games has existed for many years, but it has rarely been designed with the player’s experience as the primary focus.
If Xbox can strike the right balance, it could pave the way for similar initiatives across the industry and, more importantly, make video games substantially more accessible to everyday gamers.