Virginie Chesnais serves as chief marketing officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have approached in‑game advertising with suspicion, and the wariness is understandable.
The reputation of ads within video games is mixed at best; players frequently encounter redirects to unrelated websites or apps, misleading content, or dismissible close buttons that are difficult to locate, all of which fuel frustration. A recent study conducted by eMarketer highlighted that 52 % of gamers would abandon a session if they ran into several disruptive advertising elements. Losing half of an audience at the very moment you try to engage them is hardly an effective tactic. However, advertisements do not have to be synonymous with annoyance.
The same research revealed that one in five gamers would actually increase the frequency with which they play a title if the in‑game ads were of high quality and relevance. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of playing games continuing to climb, the prospect of well‑crafted advertisements could find a receptive home in the gaming ecosystem.
The rationale for introducing a modest advertising component to games is more compelling than many might assume, and it has already been demonstrated in linear media. Platforms such as Netflix, Disney+, and other streaming services have shown that a hybrid model—offering both ad‑free and ad‑supported tiers—can generate substantial revenue while still delivering a consistent user experience. Should Xbox’s experiment succeed, the company would not only preserve its subscription base but also unlock a previously untapped revenue stream at a moment when its financial outlook could benefit from diversification.
The significance of this development lies in the fact that console gaming is increasingly positioned as a premium service. Prices for games, consoles, accessories, and downloadable content have risen steadily, making it harder for the average consumer to justify the expense. This price inflation creates a barrier that deters many potential players from entering the market.
Xbox itself has acknowledged that, when executed correctly, advertising can help lower the cost of access to gaming experiences. The mobile gaming sector already provides a clear example: ad‑supported tiers allow players to engage with games without paying large upfront fees, thereby expanding the overall audience.
Crucially, any advertising model Xbox introduces will be optional. Players who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads, while those willing to tolerate short commercial breaks can enjoy a reduced cost of entry. By offering a two‑tier system, Xbox aims to retain its loyal fan base while simultaneously making games more approachable for newcomers. Although there is no concrete 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 granted them an hour of gameplay on a favorite or new title.
Xbox likely has internal data supporting this hypothesis. Happydemics analyzed 285 in‑game campaigns across the United Kingdom and North America and found that in‑game ads consistently outperformed television, social media, and other online formats in terms of recall and attribution. In other words, players are more likely to remember an ad they saw while playing and correctly associate it with the brand that displayed it. This advantage becomes even more pronounced when ads are placed "around the game"—for instance, before the game launches—rather than embedded directly within the gameplay.
Our data indicate that these pre‑game placements generate higher recall and clearer brand attribution compared with intrinsic in‑game placements. The distinction matters because, while we can often recall ads we encounter on TV or scrolling through social feeds, those memories do not always translate into a clear connection with the advertised brand. Gaming appears to occupy a unique niche in this regard, which may explain why companies like Xbox and EA are increasingly exploring ad‑based models for their products. It is also essential to note that Xbox’s ads are intended to appear before gameplay begins, not during the active experience.
In‑game ad formats tend to excel further down the marketing funnel, delivering stronger lifts in brand image, consideration, interest, and likeability. A combined approach—leveraging both pre‑game and in‑game ads—could theoretically offer advertisers the best of both worlds, though it also risks provoking greater resistance from players who value uninterrupted immersion. Xbox has emphasized that any advertisements will be non‑intrusive. By positioning ads prior to the start of a session, the company aims to preserve the immersive quality of the game itself.
This approach benefits both players, who avoid interruptions mid‑play, and advertisers, who want their messages to be part of a seamless experience rather than a disruptive nuisance. Relevance will be another key factor.
No gamer wants to see an ad for cat food when they do not own a cat, or a promotion for a game they have already completed. By delivering contextual, targeted ads that make sense for the individual player, Xbox can reduce the likelihood of users abandoning the session at the sight of an irrelevant commercial, while simultaneously providing brands with a highly effective platform to reach new audiences. Nonetheless, 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 justify making the model a permanent feature. 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.
Only time will reveal whether this strategy pays off. Historically, many gaming ad initiatives have relied on a "watch an ad, get an extra life" structure.
Xbox’s proposition differs: players would watch an ad to access a game they already own, rather than receiving a direct in‑game reward. Our existing data set does not yet indicate how this particular trade‑off will be received.
However, broader research on ad format perception shows that when participants are asked to describe ads they remember, terms like "non‑intrusive" and "immersive" frequently emerge as the most positive descriptors. If Xbox—and potentially other platforms in the future—aim to make advertising a sustainable component of gaming, these two qualities will be essential metrics to monitor.
In my view, Xbox is unlikely to be the first nor the last company to test such a model. Advertising within video games has existed for years, but it has not always been designed with the player experience at its core.
Should Xbox manage to strike the right balance, it could pave the way for other gaming companies to adopt similar strategies, ultimately making video games more affordable and accessible for everyday players.