Virginie Chesnais serves as the chief marketing officer for the ad‑technology analytics firm Happydemics. For many years, gamers have approached in‑game advertising with suspicion, and that wariness is not unfounded.
The reputation of ads in video games is mixed at best; players often encounter redirects to unrelated sites or apps, deceptive messaging, or closing buttons that are difficult to locate, all of which generate frustration. A recent study conducted by eMarketer highlighted that 52 percent of respondents would stop playing a title if they were bombarded with multiple intrusive ad elements.
Losing half of an audience at the moment you are trying to engage them is clearly an ineffective approach. Nevertheless, advertisements do not have to be a negative experience. The same research revealed that one in five gamers would actually increase the frequency with which they played a game if the in‑game ads were of a high caliber and felt relevant. With Xbox currently piloting a new ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, there is a genuine opportunity for well‑crafted ads to find a welcoming niche within the gaming ecosystem.
The rationale for introducing a modest ad‑for‑games model is more compelling than many anticipate, and it is already partially validated by the success of linear media. Platforms such as Netflix, Disney+ and other streaming services have demonstrated that a hybrid model—offering both ad‑free subscriptions and lower‑cost, ad‑supported tiers—can generate significant revenue while expanding the audience base. Should Xbox’s experiment prove viable, it would not only preserve the existing subscriber base but also unlock a fresh, previously untapped stream of income at a moment when the brand is eager for additional cash flow.
This development matters because console gaming is increasingly positioning itself as a premium service. The price tags attached to new releases, console hardware, accessories, and downloadable content are steadily rising, making it harder for the average consumer to justify the expense and creating a barrier for casual players. Xbox itself has stated that, when executed correctly, advertising can help lower the barrier to entry for gaming. The mobile‑gaming sector already offers a clear precedent: ad‑supported tiers allow players to engage with titles without paying large upfront fees, thereby widening the market.
Importantly, the model is entirely optional. Players who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads. By offering a two‑tier system, Xbox hopes to keep its loyal fan base while simultaneously making games more accessible to newcomers who might otherwise be deterred by cost.
Although there is currently no published survey data specific to Xbox’s new approach, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second commercial break if it granted them an hour of gameplay in a favorite or newly released title. Xbox’s internal analytics are likely to confirm this hypothesis. Happydemics data drawn from 285 in‑game campaigns across the United Kingdom and North America indicate that in‑game advertising consistently outperforms television, social media, and standard online ads in terms of recall and attribution.
In other words, players are more likely to remember an ad they see while gaming and to correctly associate it with the sponsoring brand. This is where Xbox’s “around‑the‑game” strategy—advertisements that appear before the game launches rather than embedded within the gameplay—becomes especially intriguing.
Our research shows that pre‑game placements generate a distinct advantage in ad recall and attribution when compared with ads that appear directly inside the game world. The distinction matters because, while we can often recall ads seen on TV or scrolling through social feeds, those memories do not always translate into brand awareness.
Gaming, by contrast, appears to sit in a league of its own for creating strong, memorable brand connections, which likely explains why companies such as Xbox and EA are increasingly exploring ad‑based gaming models. It is crucial to note that Xbox’s ads are not in‑game; they are pre‑game. Traditional in‑game formats tend to excel further down the conversion funnel, delivering higher lifts in brand image, consideration, interest, and overall likability. A hybrid approach that blends pre‑game and in‑game ads could theoretically provide advertisers with the best of both worlds, though it also risks provoking greater resistance from players who are sensitive to interruptions.
Xbox has pledged that the advertisements will be non‑intrusive. By placing ads before the gameplay begins, the company aims to preserve the immersive experience that gamers value. This approach benefits both players—who enjoy uninterrupted sessions—and advertisers, who want their messages to complement rather than disrupt the experience.
Relevance will be another key factor. No gamer wants to see a commercial for cat food when they don’t own a cat, or an advertisement for a game they have already completed. By delivering contextually appropriate ads and providing clear justification for their presence, Xbox can minimize the likelihood that players abandon a session at the sight of an ad, while simultaneously offering brands a highly 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 regular ad exposure; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The decision to explore ad‑supported streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with new business models.
Whether this gamble pays off remains to be seen. Historically, many gaming ad campaigns have relied on “watch an ad, earn an extra life” mechanics.
Xbox’s proposal differs: players would watch an ad to access a game they already own, rather than to earn a bonus. Our existing data set does not yet reveal how this particular trade‑off will be received. However, broader research on ad‑format perception shows that when participants are asked to describe the most appealing qualities of an ad, “non‑intrusive” and “immersive” consistently rank among the top descriptors.
If Xbox—and potentially other platforms in the future—wish to make gaming ads a lasting success, these two metrics will need to be closely monitored. My forecast is that Xbox will neither be the first nor the last company to trial this type of model.
Advertising in games has existed for years, but it has rarely been designed with the player’s experience as the primary focus. Should Xbox manage to strike the right balance, it could pave the way for similar initiatives across the industry, ultimately making video games more affordable and reachable for everyday gamers.