Virginie Chesnais serves as the chief marketing officer at Happydemics, a platform that specializes in ad‑tech analytics. For many years, gamers have viewed in‑game advertising with suspicion, and their concerns are not unfounded. The reputation of ads in video games is mixed; players often encounter redirects to unrelated sites or apps, misleading content, or tiny close buttons that are hard to locate, all of which fuel frustration.
A recent study conducted by eMarketer revealed that 52 % of gamers would abandon a session if they ran into 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 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 and the overall cost of gaming steadily climbing, there is a genuine opportunity for well‑executed ads to find a welcoming home within the gaming ecosystem. The logic behind offering an ad‑based option for games is more compelling than many realize, and it mirrors a model that has already proven successful in linear media.
Services such as Netflix, Disney+, and other streaming platforms have demonstrated that a hybrid approach—combining a subscription tier with an ad‑supported tier—can generate significant revenue while expanding the audience base. Should Xbox’s experiment succeed, it would not only preserve its existing subscriber base but also unlock a brand‑new, previously untapped revenue stream at a moment when the company could greatly benefit from additional income.
The relevance of this shift is underscored by the fact that console gaming is increasingly being positioned as a premium offering. Prices for games, consoles, accessories, and downloadable content continue to rise, making it harder for the average consumer to justify the expense.
This price inflation creates a barrier that keeps many potential players on the sidelines. Xbox itself has stated that, when executed correctly, advertising can lower the cost of entry to gaming. Mobile gaming already provides a clear example: ad‑supported tiers allow players to experience games without paying large upfront fees, thereby widening the market.
It is also crucial to note that any advertising model Xbox adopts 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—ad‑supported and ad‑free—Xbox aims to retain its loyal fan base while simultaneously making games more accessible to newcomers.
Although there is no specific survey data on this particular announcement yet, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it meant gaining an hour of playtime on a favorite or newly released title. Xbox likely has internal data that 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 when it comes to ad recall and attribution. In other words, players are more likely to remember an ad they saw within a game and correctly associate it with the sponsoring brand.
This is where Xbox’s “around‑the‑game” strategy—ads displayed before the game starts rather than embedded within the gameplay—becomes especially interesting. Our data indicate that pre‑game placements achieve higher recall and attribution scores compared with ads that appear during the actual gaming session. While traditional in‑game ads tend to excel later in the conversion funnel—boosting brand image, consideration, interest, and likability—pre‑game ads have the advantage of being non‑intrusive, preserving the immersive experience that gamers value.
Xbox has promised that its ads will not be disruptive. By placing ads before the gameplay begins, the company aims to avoid breaking immersion. This approach benefits both players, who maintain a seamless experience, and advertisers, who want their messages to be part of the experience rather than an annoyance. Relevance is another key factor.
No one wants to see an advertisement for cat food if they don’t own a cat, or for a game they have already completed. By delivering contextual, well‑targeted ads, Xbox can keep players from abandoning the session while providing brands with a highly effective channel to reach new audiences. Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how players will react to pre‑game advertising; the second is whether the revenue generated will be sufficient to sustain the model over the long term.
The decision to explore ad‑supported game streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who appears willing to experiment with new business models. Historically, many gaming ad campaigns have been built around a “watch an ad, earn an extra life” premise. Xbox’s proposal is different: it asks players to watch an ad to access a game they already own. Our existing data set does not yet reveal how this will be received, but related research on ad format perception shows that descriptors such as “non‑intrusive” and “immersive” rank among the most positively viewed attributes.
If Xbox—and potentially other companies in the future—can deliver ads that meet these criteria, they will likely see higher acceptance rates. In my view, Xbox will not be the first nor the last platform to test this approach. Advertising within 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 other developers and publishers to adopt similar models, ultimately making video games more affordable and accessible for everyday gamers.