Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have been skeptical of advertisements that appear within games, and their concerns are not unfounded.
In‑game ads have earned a reputation for being intrusive, often redirecting users to unrelated websites or apps, presenting misleading content, or featuring close buttons that are difficult to locate. These annoyances have contributed to a generally negative perception of advertising in the gaming space.
A recent study conducted by eMarketer highlighted the severity of the issue: 52 % of respondents said they would stop playing a title if they encountered multiple disruptive ad elements. Losing more than half of an audience at the very moment you are trying to engage them is far from an effective strategy. Nevertheless, advertising does not have to be synonymous with frustration.
The same research revealed a more optimistic finding—one in five gamers indicated they would actually play a game more often if the in‑game advertisements were of high quality and relevance. This suggests that, when executed correctly, ads can enhance rather than detract from the gaming experience. Xbox is currently experimenting with an ad‑supported streaming service for games, and the broader industry is witnessing a steady rise in the cost of playing—both in terms of hardware and software. In this context, well‑crafted advertisements could find a receptive audience within the gaming ecosystem.
The rationale for introducing a gaming‑specific ad model is more compelling than it may first appear, as linear media has already demonstrated the viability of hybrid revenue streams. Services such as Netflix, Disney+, and other video platforms have proven that offering both ad‑free and ad‑supported tiers can generate substantial income while maintaining a consistent user base.
If Xbox’s experiment succeeds, it could not only preserve its existing subscription revenue but also unlock an entirely new source of earnings at a moment when the brand is seeking fresh financial avenues. This development matters because console gaming is increasingly being positioned as a premium offering. Prices for consoles, new releases, accessories, and downloadable content have all been climbing, creating a financial hurdle for the average consumer. As a result, many potential players are being priced out of the market.
Xbox itself has stated that, when handled responsibly, advertising can lower the barrier to entry for gamers. The mobile gaming sector already provides a clear precedent: ad‑supported versions of popular titles allow users to play without paying large upfront fees, often in exchange for watching short commercials. This model expands the player base and introduces revenue that would otherwise be absent.
Crucially, any ad‑based approach would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are comfortable with occasional commercials could enjoy a reduced cost of access.
By offering a two‑tier system, Xbox hopes to keep its loyal community satisfied while simultaneously attracting newcomers who might otherwise be deterred by price. Although concrete survey data on Xbox’s new service is not yet available, it is reasonable to assume that a large majority of gamers would tolerate a brief, 30‑second advertisement if it meant they could play a beloved or newly released title for an hour without paying extra. Xbox’s internal research likely supports this hypothesis. Data from Happydemics, covering 285 in‑game campaigns across the United Kingdom and North America, indicates that in‑game advertising consistently outperforms traditional TV, social, and online formats in terms of recall and attribution.
In other words, players are more likely to remember an ad they see while gaming and to correctly associate it with the brand that displayed it. Xbox’s “around‑the‑game” strategy—showing ads before the gameplay begins rather than embedding them within the game world—adds another layer of interest. Our research shows that these pre‑game placements generate higher recall and attribution scores compared with ads that appear directly inside the game environment.
The distinction matters because, while we may notice advertisements on television or scrolling through social media, that awareness does not always translate into brand recognition. Gaming appears to occupy a unique space where ad exposure more readily leads to clear brand associations. This likely explains why companies like Xbox and Electronic Arts are increasingly exploring ad‑based revenue models. It is also important to note that Xbox’s ads are intended to be pre‑game, not in‑game.
In‑game formats typically excel further down the marketing funnel, delivering stronger lifts in brand image, consideration, interest, and likability. A hybrid approach—combining both pre‑game and in‑game ads—could provide advertisers with a comprehensive toolkit, though it might also provoke greater resistance from players if not balanced carefully. Xbox has pledged that the advertisements will be non‑intrusive. By placing ads before the actual gameplay, the company aims to preserve the immersive experience that gamers value.
This approach benefits both players, who avoid interruptions during play, and advertisers, who gain exposure without compromising the user experience. Relevance will be another key factor. No one wants to see an ad for cat food when they don’t own a cat, or a promotion for a game they have already completed. By delivering contextual, personalized ads, Xbox can keep players engaged rather than prompting them to abandon the session, while providing brands with an effective platform to reach new audiences.
Nevertheless, Xbox is navigating largely uncharted territory. The first unknown is how gamers will react to the presence of ads in a traditionally ad‑free environment. 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 new business models. Only time will reveal whether this gamble pays off. Historically, many gaming ad initiatives have followed a "watch an ad, earn an extra life" format.
Xbox’s proposal differs: players would watch an advertisement to gain access to a game they already own. Our existing data set does not yet indicate how this specific trade‑off will be perceived. However, broader research on ad format perception shows that descriptors such as "non‑intrusive" and "immersive" are frequently associated with positive user sentiment. If Xbox—and potentially other platforms—aim to make gaming ads a lasting success, they will need to prioritize these qualities.
My forecast is that Xbox will neither be the first nor the last company to trial this approach. Advertising within games has existed for years, 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 similar initiatives across the industry, ultimately making video games more affordable and accessible for everyday players.