Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and that wariness is not unfounded. The reputation of ads in video games is mixed; players often encounter redirects to unrelated sites or apps, misleading content, or dismiss buttons that are difficult to locate, all of which generate frustration. A recent study conducted by eMarketer revealed that 52 % of gamers would abandon a session if they ran into several intrusive ad elements.
Losing half of an audience at the moment you are trying to engage them is hardly an effective approach. However, advertisements do not have to be synonymous with annoyance.
The same research indicated that one in five gamers would actually increase the frequency with which they play a title if the in‑game ads were of a high standard. With Xbox currently piloting a new ad‑supported game‑streaming service and the overall cost of playing games continuing to climb, well‑crafted ads could find a welcoming home in the gaming ecosystem. The argument for offering a form of "ads‑for‑games" arrangement is more compelling than many anticipate, especially when we consider the success of similar models in linear media.
Services such as Netflix, Disney+, and other streaming platforms have demonstrated that a steady revenue stream can be generated while also providing a lower‑cost, ad‑supported tier. Should Xbox’s experiment prove profitable, it could not only preserve its subscription base but also unlock an entirely new source of income at a moment when the brand is seeking fresh financial avenues. The relevance of this development is amplified by the fact that console gaming is increasingly positioned as a premium experience.
Prices for games, consoles, accessories, and downloadable content are steadily rising, making it harder for the average consumer to justify the expense. This creates a barrier that keeps many potential players on the sidelines.
Xbox itself has stated that, when executed correctly, advertising can help lower the barrier to entry for gamers. The mobile‑gaming sector already offers a clear example: ad‑supported tiers let players experience games without the need for large upfront payments. By mirroring this model, Xbox could provide a pathway for newcomers to join the ecosystem without having to shell out for expensive hardware or full‑price titles. It is also crucial to note that any ad‑supported option would be entirely optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads. This two‑tier system aims to keep loyal fans satisfied while simultaneously widening access for a broader audience. Although there is no concrete survey data on the specific Xbox announcement yet, it is reasonable to assume that a majority of gamers would tolerate a 30‑second commercial 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 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 displayed it. This is where Xbox’s "around‑the‑game" strategy—ads that appear before the gameplay begins rather than embedded within the experience—becomes particularly interesting. Our data indicate that these pre‑game placements have a clear advantage in terms of recall and attribution compared with ads that appear directly inside the game world. The distinction matters because, while we might remember an ad that pops up during a TV show or while scrolling through a social feed, that memory does not always translate into brand recognition.
Gaming appears to operate in its own league for this metric, which likely explains why companies such as Xbox and EA are increasingly exploring ad‑based revenue models. It is essential to clarify that Xbox’s ads are not meant to interrupt the gameplay itself; they are pre‑game. In‑game ad formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likeability. A hybrid approach—combining both pre‑game and in‑game ads—could theoretically give advertisers the best of both worlds, but it also risks provoking greater pushback from players who value an uninterrupted experience.
Xbox has emphasized that the ads will be non‑intrusive. By placing advertisements before the game launches, the company aims to preserve the immersive nature of the session. This consideration is vital not only for gamers but also for advertisers, who want their messages to enhance rather than disrupt the user journey.
Relevance is another key factor. No one enjoys being served an ad for cat food when they don’t own a cat, or for a game they have already completed.
By ensuring that ads are contextually appropriate and provide a clear rationale for their appearance, Xbox can minimize the chance that players will abandon the session at the first sign of advertising, while simultaneously offering brands a highly effective platform to reach new audiences. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players 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 game streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with novel ideas. Only time will reveal whether this strategy delivers the intended results.
Historically, many gaming ad campaigns have relied on a "watch an ad, earn an extra life" mechanic. Xbox, however, is proposing that players watch an ad simply 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 respondents are asked to describe ads they remember, terms like "non‑intrusive" and "immersive" consistently rank among the most positive descriptors. If Xbox—and potentially other platforms in the future—aim to make advertising a lasting component of gaming, these two attributes will be critical metrics to monitor. My forecast is that Xbox will not be the first nor the last company to test such a model. Advertising in games has existed for many years, but it has not always been designed with the player’s experience at the forefront.
Should Xbox succeed, it could pave the way for other game publishers to adopt similar strategies, ultimately making video games more affordable and accessible for the everyday gamer.