Virginie Chesnais serves as chief marketing officer at the ad‑technology analytics firm Happydemics. For many years, gamers have approached in‑game advertising with suspicion, and their wariness is understandable. The reputation of ads in interactive entertainment is mixed: some interrupt gameplay to redirect users to external sites, others deliver misleading messages, and many suffer from hard‑to‑find close buttons that frustrate players. A recent study from eMarketers highlighted that 52 % of respondents would stop playing if they encountered several disruptive ad elements.
Losing half of an audience at the moment you are trying to engage them is hardly an effective tactic. However, the same research also revealed a more optimistic side: one in five gamers said they would play a title more often if the in‑game advertisements were of high quality and relevance. With Xbox currently piloting an ad‑supported game‑streaming platform and the overall cost of gaming continuing to climb, well‑crafted ads could find a natural home within the ecosystem. The notion of integrating a modest advertising component into gaming services is not untested; linear media has already demonstrated its viability.
Streaming giants such as Netflix, Disney+, and others generate substantial revenue by offering both ad‑free and ad‑supported subscription tiers. Should Xbox’s experiment succeed, it would not only preserve its paying subscriber base but also unlock a fresh, previously untapped revenue stream—something the brand could certainly use at this juncture.
The relevance of this development becomes clearer when we consider that console gaming is increasingly positioned as a premium experience. Prices for new releases, hardware, accessories, and downloadable content have risen sharply, making it harder for the average consumer to justify the expense. Xbox itself has acknowledged that, when executed correctly, advertising can lower the barrier to entry and make gaming more affordable for a broader audience.
Mobile gaming already provides a useful precedent: ad‑supported tiers enable players to engage without paying large upfront fees, thereby expanding the market. Crucially, 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 tolerate a brief commercial could enjoy a lower‑cost or even free entry point. This two‑tier approach aims to retain loyal fans while simultaneously attracting newcomers who might otherwise be deterred by price. Although concrete survey data on Xbox’s specific plan is not yet available, it is reasonable to assume that most gamers would accept a 30‑second ad in exchange for an hour of gameplay, especially if the ad is relevant and non‑intrusive. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that advertising embedded within games consistently outperforms television, social media, and standard online placements in terms of recall and accurate brand attribution.
In other words, gamers tend to remember and correctly associate the brands they see while playing. Xbox’s strategy of “around‑the‑game” advertising—ads displayed before the game launches rather than during the session—adds another layer of appeal.
Our data indicate that pre‑game formats achieve higher recall and attribution scores compared with ads that appear directly within the gameplay environment. This distinction matters because, while people can recall ads seen on TV or scrolling through feeds, they do not always link those impressions to the correct brand.
Gaming appears to operate in a league of its own for this metric, which likely explains why companies like Xbox and EA are exploring ad‑based models more aggressively. It is important to note that Xbox’s ads will not interrupt the core gameplay; they will be shown beforehand.
In‑game ad formats, by contrast, tend to excel further down the funnel, boosting brand image, consideration, interest, and overall likability. A hybrid approach—combining pre‑game and in‑game placements—could theoretically deliver the best of both worlds for advertisers, but it also risks provoking greater resistance from players who value an uninterrupted experience. Xbox has pledged that its ads will be non‑intrusive. By confining commercials to the pre‑game window, the company hopes to preserve the immersive quality of the gaming session.
This consideration benefits both the player, who enjoys an uninterrupted adventure, and the advertiser, who wants their message to be received positively rather than as a nuisance. Relevance will be key.
No one wants to see an advertisement for cat food when they do not own a cat, or a promotion for a game they have already completed. Contextual, well‑targeted ads that align with a player’s interests will reduce the likelihood of users abandoning the session at the sight of a commercial, while simultaneously giving brands an effective platform to reach new demographics.
Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how gamers will react to this new 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 game streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has shown a willingness to experiment with innovative revenue streams.
Only time will reveal whether the approach pays off. Historically, many gaming ad models have relied on “watch an ad, earn an extra life” mechanics. Xbox’s proposal, however, asks players to view an advertisement simply to access a game they already own. Our existing data set does not yet indicate how this will be received.
Yet broader research on ad format perception shows that descriptors such as “non‑intrusive” and “immersive” rank highly among positive responses. If Xbox—and potentially other platforms—can deliver ads that meet these criteria, they will be well‑positioned to succeed. My forecast is that Xbox will not be the first nor the last company to test this kind of strategy.
Advertising in video games has existed for years, but it has rarely been implemented with the player’s experience at the forefront. Should Xbox manage to strike the right balance, it could pave the way for similar initiatives across the industry, ultimately making video games more accessible to everyday gamers while creating a sustainable revenue source for developers and publishers alike.