Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have viewed in‑game advertising with suspicion, and there are valid reasons for that wariness.
The reputation of ads in interactive entertainment is mixed; players often encounter redirects to unrelated websites or apps, misleading content, or dismiss buttons that are difficult to locate, all of which generate frustration. A recent study by eMarketer revealed that 52 % of gamers would stop playing if they ran into several intrusive ad elements. Losing half of an 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 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 and felt relevant. This insight arrives at a time when Xbox is piloting an ad‑supported game‑streaming service, and the overall cost of gaming continues to climb. High‑caliber ads could therefore find a receptive niche within the gaming ecosystem.
The argument for offering an "ads‑for‑games" model is more compelling than many assume, and it has already been demonstrated to some extent by linear media platforms. Services such as Netflix, Disney+, and other streaming giants have shown that a steady revenue stream can be generated by providing both subscription‑only and ad‑supported tiers. Should Xbox’s experiment prove viable, it would not only preserve its paying subscriber base but also unlock a previously untapped source of income—a crucial development for a brand that is currently seeking fresh revenue channels. The relevance of this shift is underscored by the fact that console gaming is increasingly positioned as a premium offering.
Prices for games, consoles, accessories, and downloadable content are rising, making it more difficult for the average consumer to justify the expense. This creates a barrier that keeps many potential players on the sidelines.
Xbox itself has stated that, when executed correctly, advertising can reduce the cost of entry to gaming. The mobile gaming sector already provides a clear example: ad‑supported tiers allow players to engage with titles without paying a large upfront fee, thereby expanding the overall market. Importantly, any advertising model would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads.
By presenting a two‑tier system, Xbox aims to keep its loyal community satisfied while simultaneously lowering the financial threshold for newcomers. Although there is no concrete survey data on this specific announcement yet, it is reasonable to assume that most gamers would tolerate a short, 30‑second commercial if it granted them an hour of gameplay on a favorite or new title. Xbox likely has internal data that supports this hypothesis. Happydemics has analyzed 285 in‑game campaigns across the United Kingdom and North America, finding that in‑game advertisements consistently outperform television, social media, and other online formats in terms of recall and attribution.
In other words, players are more likely to remember an ad they saw while playing and correctly associate it with the brand that displayed it. This is where Xbox’s "around‑the‑game" strategy—ads that appear before the game starts rather than during gameplay—becomes intriguing. Our data show that pre‑game placements have a distinct advantage in ad recall and attribution when compared with ads embedded directly within the game environment.
The distinction matters because, while we may recall an ad that pops up on TV or a social feed, we do not always link that memory to a specific brand. Gaming appears to operate in a league of its own regarding this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based models.
It is crucial to note that Xbox’s ads are not in‑game but pre‑game. Traditional in‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability. A hybrid approach—combining both pre‑game and in‑game ads—could provide advertisers with a balanced mix of benefits, though it might also provoke greater resistance from players.
Xbox has assured users that the advertisements will not be intrusive. By placing ads before the actual gameplay begins, the company aims to preserve the immersive experience once the player is inside the virtual world.
This approach benefits both gamers, who avoid interruptions, and advertisers, who want their messages to complement rather than disrupt the experience. Relevance will be another key factor. No gamer wants to see an ad for cat food when they don’t own a cat, or an advertisement for a game they have already completed. Contextual, targeted ads that make sense for the individual player will help keep the audience engaged and prevent them from abandoning the session at the sight of an irrelevant spot.
Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how the community will react to these ads; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The move toward ad‑supported game streaming reflects a bold strategy by Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with unconventional ideas. Only time will reveal whether this gamble pays off.
Historically, many of our gaming‑ad initiatives have revolved around "watch an ad, earn an extra life" mechanics. Xbox’s proposal differs: players would watch an ad to access a game they already own, a scenario that our existing data set does not directly address.
However, broader research on ad‑format perception indicates that when respondents recall an ad, they often describe the format as "non‑intrusive" and "immersive"—two descriptors that consistently rank highly. If Xbox and future industry players aim to make advertising a lasting component of gaming, these attributes will be essential metrics to monitor. In my view, Xbox will neither be the first nor the last platform to test such a model.
Advertising in video games has existed for years, but it has rarely been designed with the player’s experience as the primary focus. Should Xbox succeed, it could pave the way for other developers and publishers to adopt similar strategies, ultimately making video games more affordable and accessible for everyday gamers.