Virginie Chesnais serves as chief marketing officer at the ad‑technology analytics firm Happydemics. For many years, gamers have looked at in‑game advertising with suspicion, and their concerns are not unfounded. The reputation of ads in the gaming world is mixed at best; players often encounter redirects to unrelated websites or apps, misleading content, or tiny close buttons that are hard to find, all of which create frustration and break immersion. A recent study conducted by eMarketer highlighted just how sensitive gamers are to interruptions: 52 percent said they would stop playing if they ran into multiple disruptive ad elements.
Losing half of an audience at the very 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 play a title more often if the in‑game advertisements were of high quality and felt relevant. This nuance is crucial as Xbox begins to experiment with an ad‑supported game‑streaming service at a time when the overall cost of gaming is climbing steadily. High‑quality, well‑targeted ads could find a welcoming home in this environment.
The idea of offering an "ads‑for‑games" model is not new; it has already proven its worth in linear media. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that a mixed revenue model—combining subscription fees with an ad‑supported tier—can generate substantial income while expanding the audience base.
If Xbox’s experiment succeeds, it could preserve its paying subscriber base while unlocking a fresh, previously untapped revenue stream, something the brand could certainly use given recent financial pressures. The relevance of this approach is amplified by the fact that console gaming is increasingly being positioned as a premium service. Prices for games, consoles, accessories, and downloadable content continue to rise, making it harder for the average consumer to justify the expense. This creates a barrier that excludes many potential players.
Xbox itself has acknowledged that, when executed correctly, advertising can lower the cost of entry to gaming. Mobile gaming has already shown that ad‑supported tiers can give players a way to experience games without the need for large upfront payments. Importantly, any advertising model Xbox introduces 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 access the same content for free or at a reduced cost. By offering a two‑tier system, Xbox aims to keep its loyal fan base satisfied while simultaneously making games more accessible to newcomers who might otherwise be priced out. Although there is no specific survey data on the new Xbox announcement yet, it is reasonable to assume that the majority of gamers would accept a 30‑second ad if it meant they could play a favorite title or a brand‑new game for an hour. Xbox’s own analytics likely support this hypothesis.
Data from Happydemics covering 285 in‑game campaigns across the United Kingdom and North America reveal that in‑game advertisements consistently outperform television, social media, and other online formats when it comes to ad recall and attribution. In other words, players are more likely to remember an ad they see while gaming and correctly associate it with the brand that displayed it.
This advantage becomes even more pronounced when ads are placed "around the game"—for example, before the gameplay starts—rather than embedded directly within the game world. Our research shows that these pre‑game placements generate higher recall and attribution scores than intrinsic in‑game placements. Why does this matter? While we can often remember ads that flash on a TV screen or appear in a social feed, we don’t always link those impressions to the underlying brand.
Gaming, however, appears to be in a league of its own for this metric, which likely explains why companies such as Xbox and EA are increasingly exploring ad‑based gaming models. It is also essential to note that Xbox’s ads are intended to be pre‑game, not intrusive mid‑game interruptions.
In‑game ad formats do have benefits further down the conversion funnel—they tend to boost brand image, consideration, interest, and overall likeability. Combining both pre‑game and in‑game ads could theoretically give advertisers the best of both worlds, but it also risks greater pushback from players who are sensitive to any perceived intrusion.
Xbox has promised that its ads will be non‑intrusive. By placing commercials before the game begins, the company hopes to preserve the immersive experience that gamers cherish. This approach benefits both players—who enjoy uninterrupted gameplay—and advertisers, who want their messages to be part of a positive experience rather than a disruptive one.
Relevance is another key factor. No gamer 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, relevant ads—perhaps based on a player’s interests, previous purchases, or genre preferences—Xbox can keep viewers engaged and prevent them from abandoning the session at the first sign of an irrelevant commercial. Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how players will react to the new ad format; the second is whether the revenue generated will be sufficient to sustain the model over the long term.
The move to test 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 gamble pays off. Historically, many of our gaming‑ad campaigns have relied on "watch an ad, get an extra life" mechanics—simple, direct incentives that reward the player for a brief interruption.
Xbox’s proposal is different: it asks players to watch an ad in order to access a game they already own. Our existing data set does not yet indicate how this will be received, but related research on ad‑format perception suggests that descriptors such as "non‑intrusive" and "immersive" are among the most positively viewed. If Xbox—and potentially other platforms—can deliver ads that meet these criteria, they will likely see higher acceptance rates. Looking ahead, I anticipate that Xbox will neither be the first nor the last major console manufacturer to experiment with ad‑supported models.
Advertising in games has existed for years, but it has often been implemented without the player’s experience as a primary consideration. Should Xbox manage to strike the right balance—offering optional, high‑quality, contextually relevant ads that respect the gaming flow—it could pave the way for a new revenue paradigm across the industry. This, in turn, would make video games more affordable and accessible for everyday gamers, breaking down the financial barriers that currently limit participation.