Virginie Chesnais serves as the chief marketing officer at Happydemics, a platform that specializes in ad‑tech analytics. 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, plagued by issues such as redirects to unrelated sites, misleading content, and the notorious lack of an easy‑to‑find close button. These frustrations have left a sour taste in the mouths of many players. A recent study conducted by eMarketer highlighted just how sensitive gamers are to intrusive advertising: 52 % of respondents said they would stop playing a title 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 strategy.
However, advertising does not have to be synonymous with annoyance. The same survey revealed that one in five gamers would actually increase the frequency with which they play a game if the ads presented were of high quality and relevance. In other words, well‑crafted, non‑intrusive ads can enhance the overall experience rather than detract from it. Xbox is currently experimenting with an ad‑supported game‑streaming service at a time when the overall cost of gaming is on an upward trajectory.
If the company can deliver ads that meet the high‑quality standards gamers expect, the model could find a natural home within the ecosystem. The business case for a hybrid "ads‑for‑games" arrangement is more compelling than many assume, and it has already been demonstrated in the world of linear media. Services such as Netflix, Disney+, and other streaming platforms have proven that offering both ad‑free and ad‑supported tiers can generate substantial revenue while broadening the audience base. Should Xbox’s experiment succeed, the company would not only preserve its subscription‑based revenue stream but also unlock a fresh, previously untapped source of income—a development that is especially welcome given the brand’s current financial pressures.
This discussion matters because console gaming is increasingly being positioned as a premium service. The price tags attached to new consoles, full‑price games, accessories, and downloadable content (DLC) have risen sharply, creating a financial hurdle for the average player. Xbox itself has acknowledged that, when executed correctly, advertising could lower the barrier to entry and make gaming more affordable for a wider audience. The mobile‑gaming sector offers a useful precedent.
Ad‑supported tiers in mobile titles have opened a pathway for players who might otherwise be unable to afford the upfront cost of a game. By providing a free or low‑cost option that is supported by short advertisements, developers can attract a larger user base while still monetizing through ad revenue.
Crucially, any such system must remain optional. Players who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads altogether. This two‑tier approach allows Xbox to retain its loyal fan base while simultaneously inviting newcomers who may be hesitant to invest heavily in a new console ecosystem. Although no formal survey data exists yet regarding Xbox’s specific proposal, it is reasonable to assume that a majority of gamers would tolerate a brief 30‑second commercial if it meant gaining access to a beloved title or trying out a new release for an hour.
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 traditional TV, social, and online formats when it comes to ad recall and attribution. Players are more likely to remember an ad they saw while playing and correctly associate it with the sponsoring brand. The distinction between "around‑the‑game" ads—those displayed before a session begins—and ads that appear within the gameplay itself is also significant.
Our research indicates that pre‑game placements enjoy a clear advantage in terms of recall and attribution compared with intrinsic in‑game placements. This is likely because players are in a receptive mindset before they become fully immersed in the virtual world. Nevertheless, it is essential to recognize that in‑game ads tend to excel further down the marketing funnel. They are more effective at boosting brand image, consideration, interest, and overall likability.
A combined strategy that leverages both pre‑game and in‑game formats could, in theory, deliver the best of both worlds for advertisers, though it also raises the risk of increased player pushback. Xbox has pledged that its advertisements will not be intrusive. By confining ads to the pre‑game window, the company aims to preserve the immersive quality of the gaming experience. This approach benefits both players, who avoid interruptions during gameplay, and advertisers, who gain a placement that feels integrated rather than disruptive.
Relevance will be another key factor. No gamer wants to see an ad for cat food when they do not own a cat, or an advertisement for a game they have already completed. Contextual, targeted ads that align with a player’s interests will be essential to prevent premature exits and to maximize the value for brands seeking new audiences.
Xbox is venturing into largely uncharted territory. The first unknown is how the player community will react to a systematic ad model; the second is whether the revenue generated will be sufficient to sustain the initiative over the long term. The decision by Xbox CEO Asha Sharma to explore ad‑supported streaming reflects a willingness to experiment, but only time will reveal whether the gamble pays off. Historically, many of the gaming‑ad experiments we have observed have taken the form of "watch an ad, earn an extra life" mechanics.
Xbox’s proposal diverges by asking players to watch an advertisement in order to access a game they already own, a nuance that our existing data set does not directly address. Nevertheless, broader research on ad‑format perception shows that descriptors such as "non‑intrusive" and "immersive" consistently rank among the most positively received attributes. If Xbox—and potentially other platforms in the future—are to make advertising a lasting component of gaming, they will need to focus keenly on these two metrics. My forecast is that Xbox will neither be the first nor the last major console manufacturer to test this model.
Advertising has existed in games for years, but rarely with the player’s experience as the primary design consideration. Should Xbox succeed in delivering ads that feel natural, relevant, and unobtrusive, it could pave the way for a new revenue paradigm across the industry and, importantly, make video games more financially accessible to everyday gamers.