Virginie Chesnais serves as chief marketing officer at Happydemics, a platform that specializes in ad‑tech analytics. For many years, the gaming community has looked at in‑game advertising with suspicion, and that wariness is not unfounded. Historically, advertisements embedded in video games have suffered from a poor reputation: they often redirect users to unrelated websites or apps, present misleading content, or hide the close button so well that players struggle to dismiss them. A recent study conducted by eMarketer highlighted the severity of the problem, revealing that 52 % of gamers would abandon a session if they encountered multiple intrusive ad elements.
Losing half of an audience at the very moment you are trying to engage them is clearly a flawed approach. However, advertisements do not have to be synonymous with annoyance.
The same eMarketer survey indicated that one in five gamers would actually increase the frequency with which they play a title if the ads were high‑quality and well integrated. This suggests that, when executed properly, advertising can enhance rather than detract from the gaming experience. Xbox is currently piloting an ad‑supported game‑streaming service at a time when the overall cost of playing is on an upward trajectory.
In this environment, premium‑quality ads could find a natural home within the gaming ecosystem. The argument for a hybrid "ads‑for‑games" model is bolstered by successes in linear media. Streaming giants such as Netflix and Disney+ have demonstrated that offering both ad‑free and ad‑supported tiers can generate substantial revenue while expanding the audience base.
Should Xbox’s experiment prove viable, it would not only preserve its existing subscriber base but also unlock a previously untapped source of income—something the brand could certainly use given the mounting financial pressures on the console market. Console gaming is increasingly being positioned as a premium service. Prices for games, consoles, accessories, and downloadable content have all risen, making it harder for the average consumer to justify the expense.
This creates a barrier that excludes many potential players. Xbox itself has acknowledged that, when implemented correctly, advertising can lower the cost of entry for gamers. The mobile gaming sector already provides a clear precedent: ad‑supported tiers allow players to engage with games without the need for large upfront purchases, thereby broadening the market.
Importantly, any ad‑based model on Xbox would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are price‑sensitive could opt into the ad‑supported tier. By offering a two‑track system, Xbox aims to retain its loyal fan base while simultaneously making games more accessible to newcomers. Although there is no publicly available survey data on this specific rollout yet, it is reasonable to assume that a significant majority of gamers would tolerate a short, 30‑second advertisement if it granted them an hour of gameplay on a beloved or new title.
Xbox’s internal data likely supports this hypothesis. Happydemics has compiled data from 285 in‑game campaigns across the United Kingdom and North America, showing 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 see while playing and correctly associate it with the brand that placed it. This advantage becomes even more pronounced when the ads are presented "around‑the‑game"—for example, before the game loads—rather than being embedded directly within the gameplay environment.
Our research indicates that these pre‑game placements generate higher recall and clearer brand attribution than intrinsic in‑game spots. The distinction matters because, while we can often recall ads seen on TV or scrolling through a social feed, we do not always link those impressions to the correct brand.
Gaming appears to occupy a unique position in the advertising landscape, delivering stronger brand‑memory metrics. This likely explains why companies such as Xbox and Electronic Arts are increasingly exploring ad‑based gaming models. It is essential to note that Xbox’s initial approach focuses on pre‑game ads, not on‑game interruptions. In‑game ad formats tend to excel later in the marketing funnel, delivering stronger lifts in brand image, consideration, interest, and overall likeability.
A blended strategy—combining both pre‑game and in‑game ads—could theoretically provide advertisers with the best of both worlds, but it also risks generating greater pushback from players who are sensitive to any form of interruption. Xbox has promised that its advertisements will be non‑intrusive.
By placing ads before the gameplay begins, the company aims to preserve the immersive experience that gamers value. This approach benefits both the player, who enjoys an uninterrupted session, and the advertiser, whose message is delivered in a context that feels less disruptive.
Relevance will be a key factor for the success of these ads. No gamer wants to see a promotion for cat food if they don’t own a cat, or an ad for a game they have already completed. Contextual, targeted advertising that aligns with the player’s interests will help prevent users from abandoning the experience at the first sign of an irrelevant commercial. Nevertheless, Xbox is navigating uncharted territory.
The first unknown is how players will react to a new ad format that asks them to watch a commercial in order to access a game they already own. The second unknown concerns the financial viability: will the ad revenue be sufficient to justify making this a permanent feature? The decision to explore ad‑supported streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has shown a willingness to experiment with innovative business models.
Only time will reveal whether this gamble pays off. Historically, many gaming ad campaigns have employed a "watch an ad, earn an extra life" mechanic, offering a direct in‑game reward for viewing. Xbox’s model differs: it asks players to watch an ad simply to launch a game they already possess.
Our existing data set does not yet indicate how this will be received, but related research on ad‑format perception shows that descriptors such as "non‑intrusive" and "immersive" rank highly among positive responses. If Xbox—and potentially other platforms—are to make gaming ads a sustainable revenue stream, 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 decades, 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 players.