Virginie Chesnais serves as chief marketing officer at Happydemics, an analytics platform focused on advertising technology. For years, many gamers have viewed in‑game advertising with suspicion, and their concerns are not unfounded. The reputation of ads in the gaming world is mixed, often marred by redirects to unrelated sites, misleading content, or hide‑away close buttons that frustrate users. A recent study by eMarketer highlighted that 52 % of players would stop playing if they encountered several disruptive ad elements.
Losing half of an audience at the moment you are trying to engage them is hardly an effective tactic. However, advertisements do not have to be a nuisance. 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 quality and felt relevant. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming steadily climbing, well‑crafted ads could find a receptive home in the console ecosystem.
The argument for a modest ad‑for‑games model is stronger than many anticipate, and it is already partially validated by the success of linear media. Services such as Netflix, Disney+ and other streaming platforms demonstrate that a steady revenue stream can be generated by offering both ad‑free and ad‑supported tiers. Should Xbox’s experiment prove viable, it would not only preserve its subscription base but also unlock an entirely new revenue channel at a moment when the company could use fresh cash flow.
This is significant because console gaming is increasingly being positioned as a premium offering. Prices for games, consoles, accessories, and downloadable content continue to rise, making it harder for the average consumer to justify the expense and creating a barrier to entry for casual gamers. Xbox itself has stated that, when executed correctly, advertising can lower the cost of access to gaming experiences. The mobile‑gaming sector already shows that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases.
Importantly, the model remains optional. Players who prefer an ad‑free experience can continue to pay a subscription fee, while those who are comfortable with occasional commercials can enjoy a reduced price point. By offering a two‑tier system, Xbox hopes to keep its loyal fan base while simultaneously making games more attainable for newcomers. Although there is no concrete survey data on the latest Xbox announcement, it is reasonable to assume that most gamers would tolerate a 30‑second advertisement if it meant they could play a favorite title or a new release for an hour without paying the full price.
Xbox likely has internal data that supports this hypothesis. Happydemics analyzed 285 in‑game campaigns across the United Kingdom and North America and found that in‑game ads consistently outperformed television, social, and other online formats in terms of recall and attribution. Players were more likely to remember the brand behind an ad they saw while gaming, and they were better at linking the ad to the correct company. This is where Xbox’s “around‑the‑game” approach—ads that appear before the game starts rather than within the gameplay itself—becomes intriguing.
Our data reveal that pre‑game placements generate higher ad recall and stronger brand attribution compared with intrinsic in‑game spots. The distinction matters because, while we can often remember a commercial that pops up on TV or a banner in a social feed, that memory does not always translate into a clear association with the brand. Gaming appears to be a unique environment where recall and attribution are tightly linked, which likely explains why companies such as Xbox and EA are exploring ad‑based models more aggressively. It is also crucial to note that Xbox’s ads are not embedded within the gameplay; they are shown beforehand.
Traditional in‑game formats tend to excel further down the conversion funnel, delivering higher lifts in brand image, consideration, interest, and overall likeability. A hybrid strategy that combines both pre‑game and in‑game ads could offer advertisers the best of both worlds, but it also risks provoking stronger pushback from players who value uninterrupted immersion.
Xbox has pledged that the ads will be non‑intrusive. By placing advertisements before the game launches, the company aims to preserve the immersive experience once play begins.
This approach benefits both gamers—who avoid interruptions during gameplay—and advertisers, who want their messages to be part of a seamless experience rather than a disruptive interruption. Relevance will be another key factor.
No player 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, well‑targeted ads, Xbox can keep players from abandoning the experience while giving brands an effective platform to reach new audiences.
Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how the gaming community will react to these pre‑game spots; the second is whether the ad revenue will be sufficient to sustain the model over the long term. The move toward ad‑supported game streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has shown a willingness to experiment with new business models.
Only time will reveal whether this strategy pays off. Historically, our work in gaming advertising has focused on “watch an ad, earn an extra life” type incentives.
Xbox’s proposal, however, asks players to watch an ad simply to access a game they already own. Our existing data set does not yet indicate how this will be received. Related research on ad‑format perception—where participants who recall an ad are asked to describe the format using positive adjectives—has consistently highlighted “non‑intrusive” and “immersive” as top descriptors.
If Xbox and future adopters want to make gaming ads successful, these two attributes will need to remain central to their design. My forecast is that Xbox will neither be the first nor the last platform to experiment with this approach.
Advertising has been part of gaming for many years, but it has rarely been crafted with the player’s experience at the forefront. Should Xbox succeed, it could pave the way for other developers and publishers to adopt similar models, ultimately making video games more affordable and accessible for the everyday gamer.