Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform for advertising technology. For many years, gamers have viewed in‑game advertising with suspicion, and the wariness is understandable. The reputation of ads in video games is mixed, often marred by intrusive redirects, misleading content, or hard‑to‑find close buttons that frustrate players. A recent study by eMarketer highlighted that 52 % of gamers would abandon a session if they encountered several disruptive ads.
Losing half of an audience at the very moment you are trying to engage them is hardly an effective strategy. However, advertising does not have to be a negative experience. The same research revealed that one in five players would actually increase the frequency with which they play a title if the ads were high‑quality and well‑integrated.
With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to rise, there is a genuine opportunity for premium‑grade ads to find a receptive home inside the gaming ecosystem. The business case for a "ads‑for‑games" model is more compelling than many assume, a notion that has already been validated in linear media.
Platforms such as Netflix, Disney+, and other streaming services have demonstrated that offering both ad‑free and ad‑supported tiers can generate substantial revenue while preserving a steady stream of content. Should Xbox’s experiment succeed, it could not only keep existing subscribers happy but also unlock an entirely new revenue stream—a crucial development at a time when the brand is seeking fresh sources of income.
This development matters because console gaming is increasingly positioning itself as a premium service. Prices for games, consoles, accessories, and downloadable content keep climbing, making it harder for the average consumer to justify the expense. This price inflation creates a barrier that prevents many potential players from entering the market.
Xbox itself has stated that, when executed correctly, advertising can lower the cost of entry for gamers. Mobile gaming has already shown that ad‑supported tiers can provide a gateway for players who are unwilling or unable to pay large upfront fees. By offering a free or low‑cost option that includes short advertisements, Xbox could attract a broader audience without alienating its core paying base.
Importantly, participation would remain optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those willing to tolerate a brief commercial break could enjoy the game at a reduced or zero price. This two‑tier approach aims to preserve loyalty among existing fans while simultaneously making games more accessible to newcomers.
Although there is no specific survey data on Xbox’s latest announcement, it is reasonable to assume that the majority of gamers would accept a 30‑second ad in exchange for an hour of gameplay with a favorite title or a brand‑new release. Xbox’s internal research likely supports this hypothesis. Happydemics analyzed 285 in‑game advertising campaigns across the United Kingdom and North America and found that in‑game ads consistently outperformed television, social media, and other online formats in terms of recall and attribution.
Players were more likely to remember the brand behind an in‑game ad and correctly associate it with the product. Xbox’s “around‑the‑game” strategy—showing ads before a session starts rather than embedding them within the gameplay—adds another layer of intrigue.
Our data indicate that pre‑game placements generate higher recall and attribution scores compared with intrinsic in‑game placements. This suggests that viewers form a clearer memory link when the ad is experienced outside the immersive environment of the game itself. The distinction matters because, while traditional TV or social media ads may be remembered, they do not always translate into a strong brand association.
Gaming appears to occupy a unique niche where ad recall and brand linkage are particularly strong, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based monetisation models. It is essential to note that Xbox’s ads will be pre‑game, not woven into the gameplay.
In‑game formats tend to excel later in the conversion funnel, boosting brand image, consideration, interest, and overall likability. A hybrid approach that blends pre‑game and in‑game ads could provide advertisers with a powerful toolbox, though it also risks greater pushback from players who are sensitive to any interruption. Xbox has pledged that the ads will be non‑intrusive.
By placing commercials before the game launches, the company aims to preserve the immersive experience once play begins. This is a win‑win for both gamers, who can enjoy uninterrupted sessions, and advertisers, who want their messages to be part of the experience rather than a disruption.
Relevance will be key. No one wants to see an advertisement for cat food when they don’t own a cat, or a promotion for a game they have already completed. Contextual, targeted ads that align with a player’s interests will help keep viewers engaged and reduce the likelihood of them abandoning the session at the first sign of a commercial. Nonetheless, Xbox is navigating uncharted waters.
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 the boldness of Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with new revenue models. Whether this gamble pays off remains to be seen.
Historically, many gaming ad campaigns have followed a "watch an ad, earn an extra life" framework. Xbox’s proposal is different: it asks players to watch an ad to gain access to a game they already own.
Our existing data set does not yet reveal how this will be received. Research on ad format perception shows that when participants recall an ad, they frequently describe it as "non‑intrusive" and "immersive"—the two most common positive descriptors.
If Xbox—and potentially other platforms—wish to make gaming ads successful, they will need to focus on delivering experiences that meet these criteria. My forecast is that Xbox will neither be the first nor the last company to trial such a strategy. Advertising in games has existed for years, but it has rarely been designed with the player’s experience at the forefront.
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.