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 wariness is understandable. The reputation of ads in video games is mixed at best, often plagued by issues such as redirects to unrelated sites, misleading content, or hide‑away close buttons that are difficult to locate. A recent study conducted by eMarketer revealed that 52 percent of players would abandon a session if they encountered several disruptive ad elements.
Losing half of your audience the moment you try to engage them is hardly a winning tactic. Nevertheless, 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 ads were of a high standard. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, well‑crafted advertisements could find a receptive home within the medium.
The argument for a modest, games‑focused advertising model is more compelling than many anticipate, and it is already partially validated by the success of linear media. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that a steady subscription fee paired with an ad‑supported tier can generate substantial revenue. Should Xbox’s experiment prove viable, it would not only preserve its paying subscriber base but also unlock a brand‑new, previously untapped source of income—precisely the kind of financial boost the brand needs at this juncture. This development matters because console gaming is increasingly being positioned as a premium offering.
The price tags attached to games, consoles, accessories, and downloadable content are steadily rising, creating a financial barrier for the average player. 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 provide a gateway for players who are unwilling or unable to make large upfront purchases. Crucially, the model remains optional.
Players who prefer an ad‑free experience can continue to enjoy it by paying a subscription fee. By offering a two‑tier system, Xbox aims to keep its loyal fan base while simultaneously making games more attainable for newcomers. Although there is no concrete 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 granted them an hour of gameplay on a favorite or newly released title.
Xbox likely has internal data supporting 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 when it comes to ad recall and attribution. In other words, players are more likely to remember and correctly associate the brands they see within a game environment.
Xbox’s “around‑the‑game” approach—ads that appear before the game begins rather than embedded within the gameplay—adds another layer to this picture. Our data indicate that these pre‑game placements generate higher recall and attribution scores compared with intrinsic in‑game spots. This distinction matters because, while we might recall an advertisement seen on TV or scrolling through a feed, we do not always link it to the brand that delivered it.
Gaming appears to occupy a unique niche where recall and brand association are markedly stronger, which explains why companies like Xbox and EA are increasingly exploring ad‑based gaming models. It is worth noting that Xbox’s ads are not meant to interrupt the actual gameplay; they will be shown prior to the start of a session. In‑game ad formats, on the other hand, tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likeability.
A hybrid strategy that combines both pre‑game and in‑game placements could theoretically offer advertisers the best of both worlds, though it also risks provoking greater pushback from players who value uninterrupted immersion. Xbox has pledged that the advertisements will be non‑intrusive.
By placing them before the gaming experience begins, the company hopes to preserve the immersive quality that gamers cherish. This consideration benefits both the player—who avoids interruptions during play—and the advertiser, who wants their message to be part of the experience rather than a disruptive nuisance. Relevance will be key. Nobody enjoys seeing an ad for cat food when they don’t own a cat, or promotions for games they have already completed.
By delivering contextual, well‑targeted ads, Xbox can keep players from abandoning a session at the sight of an irrelevant commercial while giving brands a highly effective platform to reach fresh audiences. Nonetheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to the presence of ads; 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, risk‑taking attitude from Xbox CEO Asha Sharma, who appears willing to experiment with new business models. Time will ultimately reveal whether this strategy pays off. Historically, many gaming ad campaigns have followed a “watch an ad, earn an extra life” paradigm.
Xbox’s proposal is different: it asks players to watch an ad to access a game they already own. Our current data set does not provide a clear answer on how this will be received. However, research on ad‑format perception shows that descriptors such as “non‑intrusive” and “immersive” are among the most positively received.
If Xbox—and potentially other platforms in the future—aim to make advertising a staple of gaming, these two attributes will be critical success factors. My forecast is that Xbox will neither be the first nor the last to experiment with this approach. Advertising has been part of gaming for years, but rarely 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 and, more importantly, make video games considerably more accessible to everyday gamers.