Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have approached in‑game advertising with suspicion, and that wariness is understandable. The reputation of ads in video games is mixed; players often encounter redirects to external sites, misleading content, or dismiss buttons that are hard to locate, all of which fuel frustration.
A recent study by eMarketer highlighted that 52 % of gamers would stop playing if they ran into multiple intrusive ad elements. Losing half of an audience at the very moment you’re trying to engage them is hardly a winning strategy. 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 high quality and relevance.
With Xbox currently piloting an ad‑supported game‑streaming service amid a backdrop of steadily climbing costs for playing, high‑caliber ads could find a natural home in the gaming ecosystem. The argument for incorporating a modest advertising component into gaming services 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 shown that offering a tier supported by advertisements can generate substantial revenue while still delivering a consistent product. Should Xbox’s experiment succeed, it would not only preserve its subscriber base but also unlock a fresh, previously untapped income stream—something the brand could certainly use at this juncture.
The relevance of this development is underscored by the fact that console gaming is evolving into a premium offering. Prices for games, consoles, accessories, and downloadable content continue to rise, making it increasingly difficult for the average consumer to justify the expense. This creates a barrier that excludes many potential players from the market.
Xbox itself has acknowledged that, when executed correctly, advertising can lower the cost of entry for gamers. The mobile‑gaming sector already provides a clear example: ad‑supported tiers enable players to engage with games without the need for a large upfront payment, thereby broadening the audience. Importantly, the advertising model Xbox is proposing remains entirely optional. Players who prefer an uninterrupted experience can continue to enjoy the service through a paid subscription, while those who are comfortable with occasional ads can benefit from a reduced price point.
By offering a two‑tier system, Xbox aims to retain its loyal fan base while simultaneously making its library more approachable for newcomers. Although specific survey data on this particular announcement is not yet available, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it granted them an hour of playtime on a favorite or new title. Xbox likely has internal data supporting this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America reveals that in‑game advertisements consistently outperform traditional TV, social, and online ads in terms of recall and attribution.
In other words, players are more likely to remember an ad they saw while gaming and correctly associate it with the brand that delivered it. 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 indicate that pre‑game placements enjoy a clear advantage in recall and attribution compared with intrinsic in‑game formats. While television and social media ads may be memorable, they do not always translate into a strong brand connection.
Gaming, by contrast, appears to excel on this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based models. It is essential to note that Xbox’s ads will not be intrusive in‑game; they will appear prior to launch, preserving the immersive experience once the player is inside the title. This approach benefits both gamers—who avoid interruptions during play—and advertisers, who want their messages to complement rather than disrupt the experience. Relevance will be key.
No player wants to see an advertisement for cat food if they don’t own a cat, or a promotion for a game they have already completed. By delivering contextual, well‑targeted ads, Xbox can keep players engaged and provide brands with a premium platform to reach new audiences.
Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how gamers will react to the presence of ads, and 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 willingness by Xbox CEO Asha Sharma to experiment and take calculated risks, but only time will reveal whether the strategy pays off.
Historically, many gaming ad models have relied on “watch an ad, earn an extra life” mechanics. Xbox’s proposal differs: it asks players to watch an ad in order to access a game they already own. Our existing data set does not yet indicate how this will be received.
Research on ad‑format perception shows that when users are asked to describe ads they recall positively, terms such as “non‑intrusive” and “immersive” frequently emerge as favorites. If Xbox—and potentially other platforms in the future—aim to make gaming ads successful, these two attributes will be critical to monitor. My forecast is that Xbox will neither be the first nor the last company to test this approach. Advertising has been part of gaming for many years, but it has often been implemented without 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 accessible to everyday gamers.