Virginie Chesnais serves as chief marketing officer at Happydemics, an analytics platform for advertising technology. For many years, gamers have viewed in‑game advertising with suspicion, and the distrust is understandable.
The reputation of ads in video games is mixed at best, plagued by issues such as redirects to unrelated sites or apps, misleading content, and hard‑to‑find close buttons that frustrate users. A recent study conducted by eMarketers revealed that 52 percent of players would abandon a session if they encountered several intrusive ad elements.
Losing half of an audience at the moment you’re trying to engage them is hardly an effective tactic. However, advertising does not have to be a negative experience. The same research indicated that one in five gamers would actually increase the frequency with which they play a title if the in‑game advertisements were of high quality and relevance.
With Xbox presently piloting an ad‑supported game‑streaming service and the overall cost of gaming on a steady upward trajectory, well‑crafted ads could find a receptive home inside the gaming ecosystem. The argument for a hybrid "ads‑for‑games" model is more compelling than many anticipate, and it has already been demonstrated to some extent in linear media.
Services like Netflix, Disney+ and other streaming platforms have shown that offering both ad‑free and ad‑supported tiers can generate substantial revenue while keeping a broad subscriber base. Should Xbox’s experiment succeed, it would not only preserve revenue from existing subscription customers but also unlock a brand‑new, previously untapped income stream at a moment when the company could use additional cash flow.
This development matters because console gaming is increasingly positioning itself as a premium offering. Prices for games, consoles, accessories, and downloadable content have risen sharply, making it harder for the average consumer to justify the expense and creating a barrier for casual gamers. Xbox itself has stated that, when executed correctly, advertising can lower the cost of entry to gaming. The mobile‑gaming sector already provides evidence that ad‑supported tiers can introduce players to a game without requiring a large upfront payment.
In that model, users watch a short commercial in exchange for a free play session, a concept that could translate well to console streaming. It is also crucial to note that any advertising would be optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads. By offering a two‑tier system—ad‑supported and ad‑free—Xbox hopes to retain its loyal fan base while simultaneously making games more affordable for newcomers.
Although there is no specific survey data on this latest Xbox announcement, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second ad if it granted them an hour of gameplay on a beloved or new title. Xbox’s own analytics are likely to confirm this hypothesis. Data from Happydemics covering 285 in‑game campaigns across the United Kingdom and North America demonstrate that in‑game advertising consistently outperforms television, social media, and other online formats in terms of ad recall and attribution. Players are more likely to remember an ad they saw while playing and to correctly associate it with the brand that served it.
This is where Xbox’s "around‑the‑game" approach—advertisements displayed before the game launches rather than embedded within the gameplay—becomes especially intriguing. Our research shows that pre‑game placements achieve higher recall and attribution scores compared with intrinsic in‑game slots. The distinction matters because while we can often recall ads seen on TV or scrolling through social feeds, that recall does not always translate into a clear brand connection.
Gaming appears to occupy a unique position where both recall and brand linkage are strong, which likely explains why companies such as Xbox and Electronic Arts are exploring ad‑based revenue models. It is important to clarify that Xbox’s ads will not interrupt the gameplay itself; they will appear in the pre‑game lobby.
Traditional in‑game formats tend to excel further down the funnel, boosting brand‑image uplift, consideration, interest, and overall likability. A combined strategy that leverages both pre‑game and in‑game ads could deliver the best of both worlds for advertisers, though it might also provoke greater resistance from players. Xbox has promised that the ads will be non‑intrusive.
By placing them before the game starts, the immersive experience remains untouched, which benefits both the player and the advertiser. Advertisers want their messages to be part of the experience, not a disruptive interruption.
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 make sense to the individual player will help prevent churn and provide brands with a highly effective platform to reach new audiences.
Nevertheless, 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 decision to explore 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 delivers the intended results. Historically, many gaming ad campaigns have followed a "watch an ad, earn an extra life" structure. Xbox’s proposal differs: players would watch an ad to unlock access to a game they already own, a scenario that our current data set does not cover.
Nevertheless, broader research on ad‑format perception indicates that descriptors such as "non‑intrusive" and "immersive" rank among the most positively received attributes. If Xbox—and potentially other platforms—aim to make gaming ads successful, these two metrics should be monitored closely.
My forecast is that Xbox will neither be the first nor the last to trial this approach. Advertising within 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, more importantly, make video games considerably more accessible to everyday gamers.