Virginie Chesnais serves as chief marketing officer at Happydemics, a platform that tracks advertising technology performance. For many years, gamers have been skeptical about the presence of advertisements within games, and their concerns are not unfounded. The reputation of in‑game ads is mixed; players often encounter redirects to unrelated sites or apps, misleading content, or tiny close buttons that are difficult to locate, all of which generate frustration.
A recent study from eMarketer highlighted that 52 percent of gamers would abandon a session if they ran into several disruptive ad elements. Losing half of an audience at the very moment you are trying to engage them is hardly an effective tactic.
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 high‑quality and well‑executed. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of playing continuing to climb, the prospect of well‑designed ads could find a receptive home in the gaming ecosystem.
The argument for a modest ad‑for‑games model is stronger than many anticipate, and it is already partially validated by the success of linear media. Services such as Netflix, Disney+, and other video platforms have demonstrated that offering a lower‑priced, ad‑supported tier can generate significant revenue while still delivering a consistent user experience.
Should Xbox’s experiment succeed, it could not only preserve its paying subscriber base but also unlock a completely new revenue stream at a moment when the brand is in need of fresh income. This development matters because console gaming is increasingly being positioned as a premium service. Prices for games, consoles, accessories, and downloadable content have risen steadily, making it harder for the average consumer to justify the expense. Xbox itself has noted that, when executed correctly, advertising can lower the barrier to entry for gamers.
Mobile gaming already provides a clear example: ad‑supported tiers enable players to engage with games without paying large upfront fees, opening the market to a broader audience. Crucially, any advertising model Xbox adopts would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are comfortable with occasional commercials could enjoy a reduced cost. By offering a two‑tier system, Xbox aims to keep its loyal fan base intact while simultaneously making games more affordable for newcomers.
Although there is no concrete survey data on this particular announcement yet, it is reasonable to assume that most gamers would tolerate a 30‑second ad if it granted them an hour of playtime on a favorite or new title. Xbox likely has internal data that supports this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America reveals that in‑game advertising consistently outperforms television, social media, and other online formats in terms of recall and attribution. In other words, players are more likely to remember an ad they saw while gaming and correctly associate it with the brand that displayed it. Xbox’s “around‑the‑game” strategy—showing ads before the gameplay begins rather than embedding them within the game world—adds another layer to this picture.
Our data indicate that these pre‑game placements generate higher recall and attribution rates compared with intrinsic in‑game spots. This distinction is important because, while we may notice ads on TV or scrolling feeds, we do not always connect them to the sponsoring brand.
Gaming appears to be a unique environment where the link between ad and brand is stronger, which explains why companies like Xbox and EA are increasingly exploring ad‑based models. It is essential to note that Xbox’s ads are not meant to interrupt the actual gameplay; they will appear prior to the start of a session. In‑game ad formats tend to excel later in the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likability. A hybrid approach—combining pre‑game and in‑game placements—could provide advertisers with the best of both worlds, though it might also provoke more resistance from players.
Xbox has pledged that the advertisements will be non‑intrusive. By delivering them before the game loads, the company hopes to preserve the immersive experience that gamers value. This approach benefits both the audience, who can enjoy uninterrupted play, and advertisers, who want their messages to be part of the experience rather than a distraction. Relevance will be key.
No player wants to see an ad 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 for the individual user will help prevent negative reactions and provide brands with a powerful channel to reach new consumers.
Nevertheless, Xbox is venturing into largely uncharted territory. It must gauge how players will respond to the presence of ads and determine whether the revenue generated will justify making the model a permanent feature. The move toward ad‑supported streaming reflects a bold, risk‑taking attitude from Xbox CEO Asha Sharma, who appears willing to experiment with new monetisation strategies. Only time will reveal whether this gamble pays off.
Historically, many gaming ad campaigns have relied on the classic “watch an ad, earn an extra life” mechanic. 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 show how this particular exchange will be received. Research on ad format perception—where respondents who recall an ad are asked to describe it using positive adjectives—has consistently highlighted “non‑intrusive” and “immersive” as top descriptors.
If Xbox and future platforms wish to make advertising a sustainable part of gaming, these two qualities will be essential metrics to monitor. In my view, Xbox will neither be the first nor the last company to test this approach. Advertising has existed in games for years, but rarely with the player’s experience as the primary focus. Should Xbox manage to integrate ads in a way that feels seamless and beneficial, it could open the door for other developers and publishers to follow suit, ultimately making video games more accessible to everyday gamers.