Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform focused 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 is mixed, often plagued by redirects to unrelated sites, misleading content, or hidden close buttons that frustrate players. A recent study from eMarketers highlighted that 52 % of respondents would stop playing if they encountered several intrusive ad elements.
Losing half of the audience at the moment you are trying to engage them is hardly a winning tactic. Nevertheless, ads do not have to be a negative experience. The same research indicated that one in five gamers would actually increase the frequency with which they played a title if the advertisements were of a high quality and seamlessly integrated.
With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, well‑crafted ads could find a welcoming niche within the ecosystem. The rationale for a "ads‑for‑games" model is more compelling than many assume, and it has already been demonstrated in linear media. Services such as Netflix, Disney+, and other streaming platforms have proven that a hybrid approach—offering both ad‑free subscriptions and lower‑cost ad‑supported tiers—can generate substantial revenue. Should Xbox’s experiment succeed, it would not only preserve its paying subscriber base but also unlock a fresh, untapped income stream at a moment when the brand is seeking additional financial support.
This is significant because console gaming is increasingly positioning itself as a premium offering. Prices for games, consoles, accessories, and downloadable content have all risen, creating a financial hurdle for the average player. When the cost of entry rises, fewer people are able to justify the expense, narrowing the market. Xbox itself has argued that, when executed correctly, advertising can help lower the barrier to entry for gaming.
The mobile‑gaming sector already shows how ad‑supported tiers can attract users who might otherwise be deterred by high upfront costs, allowing them to engage with games without a large initial outlay. Importantly, participation would be entirely optional.
Players who prefer an uninterrupted experience could 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 approachable for newcomers. Although there is no specific survey data on this particular announcement yet, it is reasonable to assume that the majority of gamers would tolerate a 30‑second commercial 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 demonstrates that in‑game advertising consistently outperforms television, social media, and other online formats in terms of ad recall and attribution. Players are more likely to remember an ad they saw while gaming and correctly associate it with the sponsoring brand. This is where Xbox’s “around‑the‑game” strategy—showing ads before the gameplay begins rather than embedding them within the game world—becomes intriguing. Our data reveal that pre‑game placements generate higher recall and attribution scores compared with intrinsic in‑game placements.
The distinction matters because, while we can often recall ads encountered on TV or social feeds, those memories do not always translate into brand recognition. Gaming appears to occupy a unique position on this metric, which may explain why companies like Xbox and EA are increasingly exploring ad‑based models. It is crucial to note that Xbox’s ads would not interrupt the actual gameplay; they would appear in the pre‑game lobby.
Traditional in‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likeability. A hybrid approach—combining pre‑game and in‑game ads—could provide advertisers with the best of both worlds, though it might also provoke greater resistance from players. Xbox has pledged that the advertisements will be non‑intrusive.
By delivering ads before the game starts, the immersive experience remains untouched, a factor that matters to both gamers and advertisers who want their messages to complement rather than disrupt the session. Relevance will be key.
No player 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. Contextual, targeted ads that make sense for the individual user will help keep the experience smooth and prevent players from abandoning the session at the first sign of irrelevant content. Nevertheless, Xbox is navigating uncharted waters. The first unknown is how the gaming community will react to the presence of 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 from Xbox CEO Asha Sharma, who has shown a willingness to experiment and take calculated risks. Whether this approach will pay off remains to be seen. Historically, many gaming ad campaigns have relied on the classic "watch an ad, earn an extra life" mechanic. Xbox, however, is asking players to watch an ad to gain access to a game they already own—a shift that our existing data does not yet cover.
Research on ad format perception does offer some insight. When participants who remembered an ad were asked to describe the format, "non‑intrusive" and "immersive" emerged as the top positive descriptors.
If Xbox—and potentially other platforms—aim to make gaming ads successful, these two attributes will be essential metrics to monitor. My forecast is that Xbox will neither be the first nor the last company to trial such a model.
Advertising in games has existed for years, but it has rarely been designed with the player’s experience at its core. 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.