Virginie Chesnais serves as the chief marketing officer at Happydemics, a platform that specializes in ad‑tech analytics. For many years, gamers have approached in‑game advertising with suspicion, and that wariness is not without cause.
The reputation of ads in video games is mixed, often marred by redirects to unrelated websites or apps, misleading content, and close buttons that are difficult to locate, all of which frustrate players. A recent study conducted by eMarketer revealed that 52 percent of gamers would abandon a session if they encountered several disruptive ad elements. Losing half of an audience at the very moment you are trying to engage them is hardly an effective tactic.
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 a high quality and felt appropriate. With Xbox currently piloting a new ad‑supported game‑streaming service and the overall cost of playing continuing to climb, there is a genuine opportunity for well‑crafted ads to find a welcoming niche within the gaming ecosystem.
The concept of offering a hybrid "ads‑for‑games" model is more appealing than many might assume, and it has already shown promise in the realm of linear media. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that a steady subscription revenue stream can be supplemented profitably by an ad‑supported tier. Should Xbox’s experiment prove successful, the company could not only preserve its paying subscriber base but also unlock a completely new source of income—a boon at a moment when the brand is seeking fresh financial avenues. The relevance of this shift is underscored by the fact that console gaming is increasingly positioned as a premium offering.
Prices for games, consoles, accessories, and downloadable content have risen to the point where many casual players find them difficult to justify. This price inflation creates a barrier that keeps a segment of potential gamers on the sidelines.
Xbox itself has acknowledged that, when executed correctly, advertising can help lower the cost of entry to gaming. The mobile gaming sector already provides evidence that ad‑supported tiers can give players a way to experience games without the need for large upfront payments. Crucially, the model remains optional. Players who prefer an uninterrupted experience can continue to do so by paying a subscription fee, while those who are comfortable with occasional ads can enjoy a reduced‑cost entry point.
By presenting a two‑tier system, Xbox hopes to retain its loyal fan base while simultaneously making its library more accessible to newcomers. Although there is no specific survey data on the current announcement, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it meant gaining access to a beloved title or a brand‑new game for an hour.
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 advertising consistently outperforms TV, social, 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 gaming and correctly associate it with the sponsoring brand.
This advantage becomes even more pronounced when ads are placed "around the game"—for example, before the gameplay begins—rather than embedded directly within the game world. Our data indicate that these pre‑game placements generate higher recall and clearer attribution than intrinsic in‑game spots. This distinction matters because, while we can often recall ads seen on television or scrolling through a social feed, we do not always link them to the correct brand.
Gaming appears to occupy a unique position in this regard, likely explaining why companies such as Xbox and Electronic Arts are increasingly exploring ad‑based gaming models. It is important to note that Xbox’s ads are intended to be pre‑game rather than in‑game. Traditional 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 that combines both pre‑game and in‑game ads could theoretically offer advertisers the best of both worlds, but it also risks provoking greater pushback from players who value an uninterrupted experience. Xbox has promised that the advertisements will be non‑intrusive. By placing ads before the game starts, the company aims to preserve the immersive nature of the gameplay itself.
This approach benefits both gamers, who avoid interruptions during play, and advertisers, who want their messages to be part of a seamless experience rather than a disruptive annoyance. Relevance will be key.
No player wants to see an ad for cat food if they don’t own a cat, or a promotion for a game they have already completed. By delivering contextual, well‑targeted ads, Xbox can keep players from abandoning a session while providing brands with an 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 move toward 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 this gamble pays off. Historically, many gaming ad initiatives have followed a "watch an ad, earn an extra life" model. Xbox’s proposal, however, asks players to watch an ad to gain access to a game they already own, a nuance that our existing data set does not directly address.
Yet broader research on ad‑format perception indicates that descriptors such as "non‑intrusive" and "immersive" rank highly among positive responses. If Xbox—and potentially other platforms in the future—aims to make gaming ads a lasting success, these two attributes will be critical metrics to monitor.
My forecast is that Xbox will neither be the first nor the last company to experiment with this approach. Advertising has been part of gaming for many years, but rarely with the player experience as the primary focus.
Should Xbox manage to strike the right balance, it could pave the way for other gaming firms to adopt similar models, ultimately making video games more affordable and accessible for everyday gamers.