Virginie Chesnais serves as the chief marketing officer at the ad‑technology analytics firm Happydemics. For many years, gamers have approached 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 external sites, misleading content, or hidden close buttons that are difficult to locate, leading to frustration. A recent study conducted by eMarketer revealed that 52 % of gamers would abandon a session if they ran into several disruptive advertising elements. Losing half of your audience at the moment you’re trying to engage them is hardly an effective tactic.
Nevertheless, advertising does not have to be a negative experience. The same research indicated that one in five gamers would actually play a title more often 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 gaming on the rise, well‑executed advertisements could find a welcoming niche within the medium.
The argument for incorporating a modest ad‑for‑games model is more compelling than many assume, and it already has a precedent in linear media. Platforms such as Netflix, Disney+, and other streaming services have demonstrated that offering an ad‑supported tier can generate significant revenue while still delivering a consistent service.
Should Xbox’s experiment prove successful, the company would not only preserve its subscription‑based revenue but also unlock a fresh, previously untapped income stream at a moment when the brand is eager for additional cash flow. This development matters because console gaming is increasingly positioning itself as a premium offering.
Prices for games, consoles, accessories, and downloadable content have steadily climbed, creating a financial barrier for the average player. Xbox itself has noted that, when executed properly, advertising can lower the cost of entry to gaming.
Mobile gaming already shows that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases. Importantly, the model remains optional. Players who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads. By presenting a two‑tier system, Xbox hopes to keep its loyal fan base while simultaneously making games more approachable for newcomers.
Although no concrete survey data exists yet on this specific rollout, it is reasonable to assume that the majority of gamers would tolerate a 30‑second commercial if it granted them an hour of playtime on a favorite or new title. Xbox likely has internal metrics that support this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertising consistently outperforms television, social media, and other online formats in terms of ad 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 served it.
This is where Xbox’s “around‑the‑game” approach—ads displayed before the gameplay begins rather than embedded within the game world—becomes intriguing. Our data indicate that pre‑game placements achieve higher recall and attribution scores compared with intrinsic in‑game placements.
The distinction matters because, while we can often recall ads encountered during TV viewing or scrolling through feeds, those memories do not always translate into a clear brand connection. Gaming appears to sit in a league of its own for this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based gaming models.
It is essential to note that Xbox’s ads are not in‑game; they appear pre‑game. Traditional in‑game ad formats tend to excel further down the funnel, delivering stronger lifts in brand image, consideration, interest, and likeability. A hybrid strategy that combines both pre‑game and in‑game ads could theoretically offer advertisers the best of both worlds, though it may also provoke greater pushback from players. Xbox has pledged that its advertisements will be non‑intrusive.
By placing ads before the game starts, the company aims to preserve the immersive experience once gameplay begins. This consideration benefits both the player—who avoids interruptions—and the advertiser, who wants their message to complement rather than disrupt the experience.
Relevance will be key. No gamer wants to see an advertisement for cat food when they don’t own a cat, or for a game they have already completed. By serving contextual, purpose‑driven ads, Xbox can keep players from abandoning the session while giving brands a highly engaged audience.
Nevertheless, Xbox is navigating uncharted waters. First, it must gauge how players will react to this new ad format; second, it must determine whether the revenue generated will justify making ad‑supported streaming a permanent feature.
The decision to explore ad‑supported game streaming reflects a bold strategy by Xbox CEO Asha Sharma, who has shown a willingness to experiment and take calculated risks. Only time will reveal whether the approach meets its objectives.
Historically, many of our gaming‑ad projects have relied on “watch an ad, earn an extra life” mechanics. Xbox, by contrast, is asking players to watch an ad simply to access a game they already own. Our existing data set does not yet indicate how this will be received. However, broader research on ad‑format perception—where respondents who recall an ad are asked to describe it—has consistently highlighted “non‑intrusive” and “immersive” as the most favored descriptors.
If Xbox and future adopters wish to succeed with gaming ads, these two attributes will be critical performance indicators. My forecast is that Xbox will neither be the first nor the last platform to trial such a model. Advertising in games has existed for years, but rarely with the player’s experience at the forefront. Should Xbox manage to strike the right balance, it could pave the way for other gaming companies to follow, ultimately making video games more affordable and accessible for everyday gamers.