Virginie Chesnais serves as Chief Marketing Officer at the ad‑technology analytics firm Happydemics. She has long observed that gamers tend to be skeptical of advertisements embedded within games, and that wariness is not unfounded. Historically, in‑game ads have suffered from a spotty reputation: they often redirect users to unrelated websites or apps, sometimes present misleading content, and frequently lack obvious ways to close them, leading to frustration among players. A recent study conducted by eMarketer highlighted that 52 % of respondents would abandon a game if they encountered several intrusive ad elements.
Losing more than half of an audience at the moment you are trying to engage them is hardly an effective strategy. However, the same research also revealed a more optimistic side: one in five gamers indicated they would actually increase the frequency with which they played a title if the in‑game advertisements were of high quality and relevance.
This nuance is especially relevant now that Xbox is piloting a new ad‑supported game‑streaming service, at a time when the overall cost of playing is on an upward trajectory. High‑caliber, well‑targeted ads could therefore find a natural home within the gaming ecosystem. The argument for incorporating an ad‑for‑games model is stronger than many anticipate, and it mirrors trends already proven in linear media. Platforms such as Netflix, Disney+, and other streaming services have demonstrated that offering both ad‑free and ad‑supported subscription tiers can generate substantial revenue while expanding the audience base.
Should Xbox’s experiment succeed, it would not only preserve its existing paying subscriber base but also unlock a previously untapped revenue stream—an attractive prospect for a brand that currently faces financial pressure. The importance of this development lies in the fact that console gaming is increasingly positioned as a premium experience. Prices for games, consoles, accessories, and downloadable content (DLC) continue to climb, making it more difficult for the average consumer to justify the expense. This price inflation creates a barrier that excludes many potential players.
Xbox itself has stated that, when executed correctly, advertising can lower the cost of entry to gaming. The mobile‑gaming sector already provides a clear example: ad‑supported tiers allow players to enjoy games without paying large upfront fees, opening the market to a broader audience. By offering a similar option, Xbox can make its ecosystem more inclusive.
Crucially, participation would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those willing to tolerate a short commercial break could access the same content for free or at a reduced cost. This two‑tier approach aims to keep loyal fans satisfied while simultaneously attracting newcomers. Although formal survey data on Xbox’s specific proposal are not yet available, it is reasonable to assume that most gamers would tolerate a brief, 30‑second advertisement if it granted them an hour of gameplay on a favorite or newly released title.
Industry data from Happydemics, covering 285 in‑game campaigns across the United Kingdom and North America, consistently show that in‑game advertising outperforms television, social media, and other online formats in terms of ad recall and attribution. In other words, players are more likely to remember and correctly associate an ad they see within a game with the brand that placed it. Xbox’s “around‑the‑game” strategy—displaying ads before the game launches rather than during gameplay—adds another layer of appeal.
Our research indicates that pre‑game placements generate stronger recall and attribution than ads embedded directly within the game environment. This distinction matters because while traditional media can be memorable, it does not always translate into a clear brand connection.
Gaming appears to excel in this metric, which likely explains why companies such as EA and now Xbox are exploring ad‑based models. It is also worth noting that Xbox’s planned ads are pre‑game, not in‑game. In‑game formats tend to excel further down the conversion funnel, delivering higher lifts in brand image, consideration, interest, and overall likability. A hybrid model that combines both pre‑game and in‑game ads could theoretically offer advertisers the best of both worlds, though it might also provoke greater resistance from players who value an uninterrupted experience.
Xbox has pledged that its advertisements will be non‑intrusive. By confining ads to the period before a game begins, the company hopes to preserve the immersive nature of gameplay.
This approach benefits both the player—who can enjoy a seamless session—and the advertiser, who wants its message to be part of the experience rather than a disruptive interruption. Relevance will be another key factor. Nobody enjoys seeing an ad for cat food when they don’t own a cat, or a promotion for a game they have already completed. Contextual, well‑targeted ads that align with a player’s interests can prevent churn and provide brands with a high‑impact platform to reach new audiences.
Nevertheless, Xbox is navigating uncharted waters. The first unknown is how gamers will react to the presence of ads; the second is whether the revenue generated will justify making the model a permanent fixture.
The move toward ad‑supported streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who appears willing to experiment with new business models. Time will reveal whether this gamble pays off. Historically, many gaming ad campaigns have relied on a "watch an ad, get an extra life" premise—essentially a direct trade‑off. Xbox’s proposal is different: it asks players to watch an ad to access a game they already own.
Our existing data set does not yet indicate how this will be received. However, broader research on ad format perception shows that when participants are asked to describe ads they remember positively, terms like "non‑intrusive" and "immersive" frequently emerge as top descriptors. If Xbox—and potentially other platforms in the future—aim to make advertising a sustainable part of gaming, these two attributes will be critical to monitor.
In my view, Xbox will neither be the first nor the last to experiment with this approach. Advertising has been part of gaming for years, but often without the player’s experience as a primary consideration. Should Xbox succeed in delivering ads that respect the gamer’s immersion while providing value to advertisers, it could pave the way for other companies to follow suit, ultimately making video games more affordable and accessible for everyday players.