Virginie Chesnais serves as chief marketing officer at the ad‑technology analytics firm Happydemics. For years, many gamers have viewed in‑game advertising with suspicion, and the mistrust is understandable.
The reputation of ads in the gaming space has been tarnished by practices such as redirecting players to unrelated websites or apps, presenting misleading content, and offering obscure or missing close buttons that frustrate users. A recent study from eMarketers highlighted that 52 % of respondents would stop playing a title if they encountered multiple disruptive ad elements. Losing half of an audience at the moment you are trying to engage them is hardly a winning strategy. Nevertheless, 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 game if the in‑game ads were of high quality and relevance. This insight comes at a time when Xbox is piloting an ad‑supported game‑streaming service, and when the overall cost of gaming—hardware, software, accessories, and downloadable content—is steadily climbing. High‑quality, well‑placed ads could therefore find a welcoming niche within the gaming ecosystem.
The business case for a hybrid model that mixes subscription revenue with advertising income is already proven in linear media. Platforms such as Netflix, Disney+, and other streaming services have demonstrated that offering an ad‑supported tier can generate substantial additional revenue while preserving a premium, ad‑free experience for paying subscribers.
If Xbox’s experiment succeeds, it could not only keep its existing subscriber base satisfied but also unlock a new, previously untapped stream of income—a development the company could certainly use given recent financial pressures. Console gaming is increasingly being positioned as a premium service.
Prices for consoles, games, accessories, and DLC have risen to the point where many casual players find them difficult to justify, creating a barrier to entry for a large segment of the market. Xbox itself has argued that, when executed correctly, advertising can lower the cost of access to gaming experiences. Mobile gaming already offers a precedent: ad‑supported tiers allow players to try games without paying large upfront fees, expanding the overall player pool. Crucially, any advertising model Xbox adopts would be optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those willing to tolerate a short commercial break could enjoy a lower‑cost or even free entry point. This two‑tier approach aims to preserve loyalty among hardcore fans while simultaneously making games more approachable for newcomers.
Although we lack specific survey data on Xbox’s new format, it is reasonable to assume that a majority of gamers would tolerate a 30‑second ad if it granted them an hour of gameplay on a favorite or new title. Happydemics data from 285 in‑game campaigns across the UK and North America show that in‑game advertising consistently outperforms TV, social, and standard online ads in terms of recall and accurate brand attribution. In other words, gamers are more likely to remember and correctly associate an ad they see while playing with the brand behind it.
Xbox’s “around‑the‑game” strategy—showing ads before a session begins rather than embedding them within the gameplay—adds another layer of appeal. Our research indicates that pre‑game placements generate stronger ad recall and attribution compared with ads that appear directly inside the game world. This distinction matters because, while many consumers can recall a commercial seen on television or scrolling through a social feed, they often fail to link that exposure to a specific brand. Gaming, by contrast, appears to create a tighter memory‑brand connection, which explains why companies like EA and now Xbox are exploring ad‑based models more aggressively.
It is important to note that Xbox’s ads would not interrupt the core gameplay; they would appear before the game launches, preserving the immersive experience that players value. This approach benefits both the audience—who avoids mid‑session interruptions—and advertisers, who want their messages to be part of a seamless experience rather than a disruptive annoyance.
Relevance will be key. No player wants to see an advertisement for cat food when they don’t own a cat, or for a game they have already completed. By delivering contextual, targeted ads that make sense for the individual gamer, Xbox can minimize the risk of users abandoning the session at the first sign of an irrelevant commercial, while offering brands a highly effective platform to reach new demographics. Nonetheless, Xbox is navigating uncharted waters.
The first unknown is how the gaming community will react to pre‑game advertising; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The move to test ad‑supported streaming reflects a willingness by Xbox CEO Asha Sharma to experiment and take calculated risks, but only time will reveal whether the strategy pays off. Historically, many of our gaming‑ad projects have revolved around “watch an ad, earn an extra life” mechanics. 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 descriptors such as “non‑intrusive” and “immersive” consistently rank among the most favorable. If Xbox—and potentially other platforms—can deliver ads that meet these criteria, they stand a good chance of gaining player acceptance.
In my view, Xbox will neither be the first nor the last to experiment with this model. Advertising has been part of gaming for decades, but it has rarely been designed with the player’s experience as the primary focus.
Should Xbox manage to strike the right balance, it could pave the way for similar initiatives across the industry, ultimately making video games more affordable and accessible for the everyday gamer.