Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and that wariness is understandable. The reputation of ads in video games has been mixed at best, with frequent complaints about redirects to unrelated websites or apps, misleading content, and close buttons that are difficult to locate.
A recent study conducted by eMarketer highlighted that more than half—52 percent—of players would abandon a game if they encountered several disruptive advertising elements. Losing half of an audience at the moment you are trying to engage them is hardly an effective approach. Nevertheless, advertising does not have to be a negative experience.
The same eMarketer survey revealed a more optimistic insight: one in five gamers said they would actually play a title more often if the in‑game advertisements were of high quality and well integrated. This suggests that, when executed correctly, ads can enhance rather than detract from the gaming experience. Xbox is currently experimenting with a new ad‑supported game‑streaming service, and this move comes at a time when the overall cost of playing video games is steadily climbing. High‑quality, non‑intrusive ads could therefore find a receptive home within the gaming ecosystem.
The logic behind offering an ad‑supported tier for games is not new; it has already been demonstrated in the world of linear media. Services such as Netflix, Disney+, and other streaming platforms have shown that a hybrid model—combining a subscription‑free, ad‑supported option with a premium, ad‑free tier—can generate significant revenue while expanding the audience base. If Xbox’s experiment proves successful, it could not only preserve its existing subscriber base but also unlock a fresh, previously untapped source of income at a moment when the brand is looking for additional financial streams. The relevance of this development is amplified by the fact that console gaming is increasingly being positioned as a premium service.
Prices for games, consoles, accessories, and downloadable content have risen to levels that many casual players find difficult to justify. This price inflation creates a barrier that discourages everyday gamers from entering or staying within the ecosystem. Xbox itself has acknowledged that, when implemented thoughtfully, advertising can lower the cost of access to gaming experiences. Mobile gaming already offers a clear precedent: ad‑supported tiers allow players to enjoy games without paying large upfront fees, thereby widening the market.
Importantly, the proposed model is entirely optional. Players who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads, while those who are price‑sensitive can opt into the ad‑supported tier. By offering a two‑tier system, Xbox aims to keep its loyal fan base satisfied while simultaneously making games more approachable for newcomers. Although there is currently no specific survey data on Xbox’s latest announcement, it is reasonable to assume that a substantial majority of gamers would tolerate a short, 30‑second advertisement if it meant gaining access to an hour of gameplay on a favorite or new title.
Happydemics’ own data, derived from 285 in‑game campaigns across the United Kingdom and North America, consistently show that in‑game ads outperform traditional TV, social, and online advertisements when it comes to recall and attribution. In other words, players are more likely to remember an ad they saw while playing a game and correctly associate it with the brand that displayed it. Xbox’s strategy emphasizes “around‑the‑game” advertising—ads that appear before the game starts rather than within the gameplay itself.
Our research indicates that these pre‑game formats have a clear advantage in terms of recall and attribution when compared with intrinsic, in‑game placements. This distinction matters because, while we might remember a commercial that pops up during a TV break, we do not always link it to a specific brand. Gaming appears to be in a league of its own for this metric, which likely explains why companies such as Xbox and Electronic Arts are increasingly exploring ad‑based models.
It is also worth noting that Xbox’s ads are not meant to interrupt the core gameplay. By positioning advertisements before the game launches, the company aims to preserve the immersive experience that gamers value.
This approach benefits both players—who avoid mid‑session disruptions—and advertisers, who want their messages to be part of a seamless experience rather than a jarring interruption. Relevance is another crucial factor. No gamer wants to see an advertisement for cat food when they do not own a cat, or for a game they have already completed. Contextual, targeted ads that align with a player’s interests are more likely to be accepted and less likely to trigger immediate abandonment.
By delivering ads that make sense in the gaming context, Xbox can provide brands with a high‑impact platform while keeping players engaged. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to pre‑game advertising, and the second is whether the revenue generated will be sufficient to sustain the model over the long term. Xbox CEO Asha Sharma’s decision to explore ad‑supported streaming reflects a willingness to take calculated risks and experiment with new business models. Only time will reveal whether this strategy will meet its objectives. Historically, many gaming ad campaigns have relied on a “watch an ad, earn an extra life” mechanic, offering a direct, tangible reward for ad consumption.
Xbox’s proposal differs: it asks players to watch an advertisement to access a game they already own, without an immediate in‑game reward. Our data set does not yet indicate how this trade‑off will be perceived by the community. However, broader research on ad format perception shows that when participants recall an ad, they often describe the experience using terms like “non‑intrusive” and “immersive.” These descriptors were among the most frequently selected positive attributes in recent studies.
If Xbox—and potentially other platforms in the future—wish to make advertising a lasting component of gaming, they will need to focus closely on these two qualities. My forecast is that Xbox will neither be the first nor the last major console manufacturer to test ad‑supported models.
Advertising within games has existed for years, but it has rarely been designed with the player’s experience as the primary concern. Should Xbox succeed in delivering ads that feel natural, relevant, and non‑disruptive, it could set a precedent that encourages other gaming companies to adopt similar strategies. In turn, this could make video games more financially accessible for the everyday gamer, lowering the barrier to entry and expanding the overall market for interactive entertainment.