Virginie Chesnais serves as chief marketing officer at the ad‑tech analytics firm Happydemics. For many years, gamers have viewed in‑game advertising with suspicion, and the wariness is understandable.
The reputation of ads within video games is mixed at best, with frequent complaints about redirects to unrelated sites or apps, misleading creative, and hide‑ously placed close buttons that are hard to find. A recent eMarketer survey highlighted that 52 percent of respondents would abandon a game if they encountered several disruptive ad elements, indicating that losing half of your audience at the moment you’re trying to engage them is a poor tactic. Nonetheless, advertising does not have to be a negative experience.
The same study revealed that one in five gamers would actually increase the frequency with which they played a title if the in‑game ads were of a high quality. This suggests that, when executed well, advertisements can enhance rather than detract from the gaming experience. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of playing games climbing steadily, premium‑grade ads could find a welcoming niche within the console ecosystem. The argument for incorporating a modest advertising model into games is more compelling than many anticipate, a notion that has already been validated in the world of linear media.
Streaming giants such as Netflix, Disney+, and others have demonstrated that a mixed‑model approach—offering both ad‑free subscriptions and lower‑cost ad‑supported tiers—can generate substantial revenue while expanding the audience base. Should Xbox’s experiment succeed, it would not only preserve its paying subscriber base but also unlock a brand‑new revenue stream at a moment when the company is eager for fresh income. This development matters because console gaming is increasingly being positioned as a premium service.
Prices for games, consoles, accessories, and downloadable content have risen to a point where many casual players find them difficult to justify, erecting a barrier to entry for the everyday enthusiast. Xbox itself has stated that, when handled correctly, advertising can reduce the cost of accessing games. The mobile gaming sector already offers a proof‑of‑concept: ad‑supported tiers let players engage with titles without the need for large upfront purchases, thereby widening the market.
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 more price‑sensitive could opt into the ad‑supported tier.
By presenting a two‑tier system, Xbox aims to keep its loyal fan base happy while simultaneously making games more attainable for newcomers. Although no formal survey data exists yet on this specific rollout, it is reasonable to assume that a majority of gamers would tolerate a brief 30‑second advertisement if it granted them an hour of gameplay on a favorite or new title. Xbox’s internal data likely supports this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertisements consistently outperform television, social media, and other online formats in terms of recall and attribution. Players are more likely to remember an ad they saw while gaming and to correctly associate it with the brand that served it. This advantage becomes even more pronounced with “around‑the‑game” placements—ads shown before the game launches— which, according to the data, deliver a clear edge in recall and attribution compared with ads embedded directly within the gameplay environment.
Why does this matter? While we can often recall ads that appear on TV or in a scrolling feed, those memories do not always translate into a clear brand connection. Gaming appears to occupy a unique space where ad recall more readily converts into brand awareness, a factor that likely explains why companies such as Xbox and EA are increasingly exploring ad‑based monetisation models.
It is essential to note that Xbox’s plan focuses on pre‑game ads rather than intrusive in‑game placements. In‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likeability.
A hybrid approach that blends pre‑game and in‑game ads could theoretically provide the best of both worlds for advertisers, but it also risks heightened resistance from players who value an uninterrupted experience. Xbox has pledged that any advertisements will be non‑intrusive. By delivering ads before the game begins, the company hopes to preserve the immersive nature of the gameplay itself. This approach benefits both the player—who can dive straight into the experience without interruption—and the advertiser, who wants its message to be part of a seamless journey rather than a jarring interruption.
Relevance will be another key factor. No gamer wants to see an ad for cat food when they have no feline companion, or a promotion for a game they have already completed. Contextual, well‑targeted ads that make sense in the moment will help prevent players from abandoning the session at the first sign of an irrelevant commercial, while also giving brands an effective platform to reach new audiences.
Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how the gaming community will react to this new ad model; the second is whether the revenue generated will be sufficient to sustain the approach over the long term. The move to test ad‑supported streaming reflects a willingness by Xbox CEO Asha Sharma to experiment and take calculated risks, but only time will reveal whether the strategy delivers the desired outcomes.
Historically, many gaming ad campaigns have relied on a “watch an ad, earn an extra life” mechanic. Xbox’s proposal differs: players would watch an ad to access a game they already own, a nuance that our existing data set does not directly address. However, broader research on ad format perception indicates that descriptors such as “non‑intrusive” and “immersive” rank among the most positively received attributes.
If Xbox and future adopters want to make advertising a lasting component of the gaming experience, these two qualities will be essential metrics to monitor. My forecast is that Xbox will neither be the first nor the last platform to experiment with this model.
Advertising in games has existed for years, but it has rarely been designed with the player’s convenience at the forefront. Should Xbox manage to strike the right balance, it could pave the way for other publishers to follow suit, ultimately making video games more affordable and accessible for the everyday gamer.