Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an ad‑technology analytics firm. For many years, gamers have looked at in‑game advertising with suspicion, and there are good reasons for that wariness.
The reputation of ads in video games is mixed at best: many users encounter redirects to unrelated websites or apps, misleading content, or frustratingly hidden close buttons, all of which erode the playing experience. A recent study by eMarketers highlighted the severity of the problem, revealing that 52 % of players would abandon a session if they ran into multiple disruptive ad elements.
Losing half of an audience at the moment you are trying to engage them is hardly an effective approach. However, advertisements do not have to be detrimental. 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 high quality and well integrated. This insight arrives at a moment when Xbox is piloting a new ad‑supported game‑streaming service, and the overall cost of gaming continues to climb.
In such an environment, premium, well‑crafted ads could find a natural home within the gaming ecosystem. The rationale for a hybrid "ads‑for‑games" model is more compelling than many anticipate, as linear media has already demonstrated. Platforms such as Netflix, Disney+ and other streaming services have proven that offering an ad‑supported tier can generate significant revenue while still delivering a consistent service. Should Xbox’s experiment succeed, it would not only preserve its existing subscription base but also unlock an entirely new revenue stream at a time when the company is eager for fresh income sources.
The significance of this development lies in the fact that console gaming is increasingly positioned as a premium offering. Prices for games, consoles, accessories and downloadable content have risen steadily, creating a financial hurdle for the average player. Xbox itself has stated that, when executed correctly, advertising can lower the cost of entry into gaming. Mobile gaming has already shown that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases.
Crucially, participation would remain optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while a free or lower‑cost tier would be available for those who are comfortable with occasional commercial breaks. By providing a two‑tier system, Xbox hopes to keep its loyal fan base while simultaneously widening its reach to newcomers.
Although no specific survey data on Xbox’s latest announcement is yet available, it is reasonable to assume that the majority of gamers would tolerate a 30‑second advertisement if it meant gaining an hour of gameplay in a beloved or new title. Xbox’s internal data likely supports this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the UK and North America shows that in‑game advertising consistently outperforms television, social media, and other online formats in terms of ad 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 sponsoring brand. 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 indicate that pre‑game placements generate higher recall and attribution scores compared with intrinsic in‑game slots. The distinction matters because, while we may notice ads on TV or scrolling through a feed, we do not always link those impressions to a specific brand.
Gaming appears to occupy a unique position on this metric, which may explain why companies like Xbox and EA are increasingly exploring ad‑based models. It is also important to note that Xbox’s ads are not embedded within the game world; they are shown prior to gameplay. Traditional in‑game formats tend to excel further down the funnel, delivering stronger lifts in brand image, consideration, interest, and ad likability.
A blended strategy that combines pre‑game and in‑game ads could theoretically offer the best of both worlds for advertisers, though it might also provoke greater pushback from players. Xbox has pledged that the ads will be non‑intrusive, a promise that is easy to understand.
By placing commercials before the session begins, the company aims to preserve the immersive experience once the player is actually inside the game. This is beneficial not only for gamers but also for advertisers, who want their messages to complement rather than disrupt the experience. Relevance will be another key factor.
No one wants to see a promotion for cat food when they don’t own a cat, or an advertisement for a game they have already completed. Contextual, well‑targeted ads can keep players from abandoning the session while giving brands a highly engaged audience.
Nevertheless, Xbox is venturing into largely uncharted territory—both in terms of player reaction and in the potential revenue upside. The success of an ad‑supported streaming model will determine whether this becomes a lasting component of Xbox’s business strategy.
The move reflects a bold, risk‑taking attitude from Xbox CEO Asha Sharma, who has shown a willingness to experiment with new revenue models. Only time will reveal whether the approach pays off. Historically, many gaming ad campaigns have relied on "watch an ad, get an extra life" mechanics. Xbox’s proposal is different: players would watch an ad to access a game they already own.
Our existing data set does not yet indicate how this particular exchange will be received. However, broader research on ad‑format perception suggests that descriptors such as "non‑intrusive" and "immersive" are among the most positively received. If Xbox—and potentially other platforms—aim to make advertising a sustainable part of gaming, these two qualities will be essential to monitor. In my view, Xbox will neither be the first nor the last company to experiment with this model.
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 similar initiatives across the industry and, importantly, make video games more affordable and accessible for everyday gamers.