Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have viewed in‑game advertising with suspicion, and that wariness is understandable. The reputation of ads in the gaming sphere is mixed; players often encounter redirects to unrelated websites or apps, misleading content, or cumbersome close buttons that are hard to locate, all of which contribute to a frustrating experience. A recent study conducted by eMarketer highlighted the severity of the issue: 52 percent of respondents said they would stop playing a game if they ran into multiple intrusive ad elements.
Losing half of an audience at the very moment you’re trying to engage them is hardly an effective strategy. Nevertheless, advertisements do not have to be inherently detrimental.
The same research revealed that one in five gamers would actually increase the frequency with which they play a title if the in‑game ads were of a high standard. This suggests that quality matters more than the mere presence of ads.
Xbox is currently piloting an ad‑supported game‑streaming service at a time when the overall cost of gaming continues to climb. In this environment, well‑executed advertising could find a receptive home within the medium.
The concept of pairing games with advertising is not new; linear media have already demonstrated its viability. Services such as Netflix, Disney+, and other streaming platforms have built profitable models that combine a subscription tier with an ad‑supported option. Should Xbox’s experiment succeed, it would not only preserve its existing subscriber base but also unlock a fresh revenue stream—something the brand could certainly use given recent financial pressures. The relevance of this approach is amplified by the fact that console gaming is increasingly being positioned as a premium offering.
Prices for games, consoles, accessories, and downloadable content have risen steadily, creating a financial hurdle for the average consumer. Xbox itself has stated that, when executed correctly, advertising can lower the barrier to entry and make gaming more affordable. The mobile gaming sector already offers a clear precedent: ad‑supported tiers enable players to engage with titles without paying large upfront fees, thereby expanding the overall market. Importantly, any advertising model Xbox introduces would be optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those willing to view ads could access the same content at a reduced cost. This two‑tier system aims to retain loyal fans while simultaneously attracting new users who might otherwise be priced out.
Although concrete survey data on Xbox’s specific rollout is not yet available, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second commercial if it granted them an hour of gameplay on a favorite or newly released title. Happydemics’ own data, drawn from 285 in‑game campaigns across the United Kingdom and North America, indicate that in‑game advertisements consistently outperform traditional TV, social, and online ads in terms of 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 served it.
Xbox’s “around‑the‑game” strategy—showing ads before the game starts rather than embedding them within the gameplay—adds another layer of intrigue. Our research shows that pre‑game placements enjoy a distinct advantage in recall and attribution compared with ads that appear directly inside the game world.
This distinction matters because, while we may remember a television commercial or a social media banner, we do not always link that memory to the sponsoring brand. Gaming, by contrast, appears to create a stronger brand‑to‑ad connection, which likely explains why companies like EA and Xbox are increasingly exploring ad‑based monetisation.
It is crucial to note that Xbox’s ads are planned to be pre‑game, not in‑game. In‑game ad formats tend to excel further down the conversion funnel, delivering higher lifts in brand image, consideration, interest, and overall likeability.
A hybrid approach—combining both pre‑game and in‑game placements—could theoretically provide advertisers with the best of both worlds, but it also risks provoking greater pushback from players who value an uninterrupted experience. Xbox has pledged that any ads will be non‑intrusive, meaning they will appear before the gameplay begins and will not interfere with the immersive experience that gamers cherish. This design choice benefits both the player, who retains a seamless session, and the advertiser, who wants their message to be part of the experience rather than a disruptive interruption.
Relevance will be another key factor. Nobody enjoys seeing an advertisement for cat food when they do not own a cat, nor do they appreciate promotions for games they have already completed. By delivering contextual, audience‑specific ads, Xbox can keep players engaged rather than prompting them to abandon the session, while simultaneously offering brands a highly targeted platform.
Nevertheless, Xbox is venturing into largely uncharted territory. The company must gauge how players will react to this new model and determine whether the revenue generated will justify a long‑term commitment to ad‑supported streaming. The initiative reflects the bold, risk‑taking mindset of Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with novel approaches.
Only time will reveal whether the strategy pays off. Historically, many gaming ad campaigns have relied on the classic “watch an ad, earn an extra life” mechanic. Xbox’s proposal differs: players would watch an ad to gain access to a game they already own, rather than receiving a small in‑game reward. Our existing data set does not yet indicate how this shift will be received.
However, broader research on ad format perception shows that when participants recall an advertisement, they often describe the format as “non‑intrusive” and “immersive.” These two attributes are likely to become critical performance metrics for any future gaming ad initiatives. If Xbox and other companies can deliver ads that meet these criteria, they stand a good chance of winning over both gamers and advertisers. In my view, Xbox will neither be the first nor the last platform to experiment with this model.
Advertising has been part of gaming for many years, but it has rarely been designed with the player’s experience at the forefront. Should Xbox succeed in integrating ads in a way that feels natural and optional, it could set a precedent that other developers and publishers follow, ultimately making video games more accessible to everyday players while opening up new revenue channels for the industry.