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 there are good reasons for that wariness. The reputation of ads in interactive entertainment is mixed at best, with common complaints ranging from redirects to unrelated websites or apps, misleading content, and the inability to locate a close button when the ad appears.
A recent study conducted by eMarketer highlighted that 52 % of players would abandon a session if they encountered multiple intrusive ad elements. Losing half of your audience at the moment you are trying to engage them is hardly a winning formula. However, advertisements do 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 ads were of a high quality and felt relevant.
With Xbox currently piloting a new ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, well‑crafted ads could find a welcoming niche in the console ecosystem. The argument for introducing a modest advertising component to games is more compelling than it might first appear, and it is already supported by evidence from linear media.
Services such as Netflix, Disney+, and other streaming platforms have demonstrated that a hybrid model—offering both ad‑free subscriptions and lower‑cost ad‑supported tiers—can generate substantial revenue while expanding the audience base. If Xbox’s experiment proves effective, it could not only preserve its paying subscriber base but also unlock an entirely new, previously untapped source of income at a moment when the brand is seeking fresh financial streams. This development matters because console gaming is increasingly positioned as a premium offering.
Prices for games, consoles, accessories, and downloadable content have risen steadily, making it harder for the average consumer to justify the expense and creating a barrier to entry for casual players. Xbox itself has acknowledged that, when executed correctly, advertising can lower the cost of access to gaming experiences.
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. Importantly, the advertising option would be entirely optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads.
By offering a two‑tier system, Xbox aims to retain its loyal fan base while simultaneously making games more affordable for newcomers. Although there is no specific survey data on this particular announcement yet, it is reasonable to assume that the majority of gamers would tolerate a 30‑second commercial if it meant they could play a beloved title or a brand‑new game for an hour without additional cost. Xbox likely has internal data that supports this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertisements consistently outperform TV, social, and other online formats in terms of ad recall and attribution.
Players are more likely to remember an ad they saw while gaming and correctly associate it with the brand that served it. This is where Xbox’s “around‑the‑game” approach—ads displayed before the game starts rather than embedded within the gameplay—becomes intriguing.
Our data indicate that pre‑game placements deliver a clear advantage in recall and attribution compared with intrinsic in‑game slots. The distinction matters because, while we can often recall ads that appear on television or social feeds, those memories do not always translate into a clear brand link.
Gaming appears to operate in its own league for this metric, which may explain why companies like Xbox and EA are increasingly exploring ad‑based models. It is crucial to note that Xbox’s ads will not interrupt the gameplay itself; they will appear prior to the session. In‑game ad formats tend to excel further down the conversion funnel, boosting brand image, consideration, interest, and likeability. A combined strategy that leverages both pre‑game and in‑game ads could theoretically provide the best of both worlds for advertisers, though it might also provoke greater pushback from players who value an uninterrupted experience.
Xbox has promised that its advertisements will be non‑intrusive. By placing ads before the game begins, the platform aims to preserve the immersive nature of the experience. This approach benefits both players—who avoid disruption during play—and advertisers, who want their messages to be part of the experience rather than a nuisance.
Relevance will be another key factor. Nobody enjoys being served a cat‑food commercial when they don’t own a cat, or seeing promotions for games they have already completed. By delivering contextual, well‑targeted ads, Xbox can keep players from abandoning the session while giving brands an effective channel to reach new audiences. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how gamers 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 toward ad‑supported game streaming reflects a bold strategy by Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment and take calculated risks. Whether this approach will pay off remains to be seen.
Historically, our work on gaming ads has focused on “watch an ad, earn an extra life” type incentives. Xbox’s proposal, however, asks players to watch an ad simply to access a game they already own. Our existing data set does not yet reveal how this trade‑off will be received. Related research on ad‑format perception shows that when participants are asked to describe the format they remember, “non‑intrusive” and “immersive” rank among the top positive descriptors.
If Xbox—and potentially other platforms in the future—are to succeed with gaming ads, these two attributes will be essential metrics to monitor. My forecast is that 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, ultimately making video games more accessible to everyday gamers.