Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have viewed in‑game advertising with suspicion, and that 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 the absence of a clear way to close the ad. These annoyances have contributed to a negative perception of advertising within interactive entertainment.
A recent study conducted by eMarketer highlighted the severity of the problem: more than half of respondents—52 percent—said they would abandon a game if they encountered several disruptive ad elements. Losing half of a potential audience at the very moment you are trying to engage them is hardly an effective tactic. 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 advertisements embedded in the experience were of high quality and relevance. This dichotomy suggests that advertising does not have to be a detriment to the gaming experience.
In fact, with Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of playing games continuing to climb, well‑crafted ads could find a natural home in the ecosystem. The concept of offering a hybrid model—where some users pay a premium subscription while others enjoy a free, ad‑supported tier—has already proven successful in linear media. Services like Netflix, Disney+, and other streaming platforms have demonstrated that a dual‑revenue approach can generate substantial income while still delivering a consistent product to consumers. If Xbox’s experiment proves viable, it could not only preserve its existing subscriber base but also unlock an entirely new revenue stream at a moment when the brand is seeking fresh sources of profit.
The relevance of this model is heightened by the fact that console gaming is increasingly positioned as a premium offering. Prices for games, consoles, accessories, and downloadable content (DLC) have risen steadily, making it more difficult for the average player to justify the expense.
Xbox itself has acknowledged that, when executed correctly, advertising can lower the barrier to entry and make gaming more affordable for a broader audience. Mobile gaming already demonstrates the power of ad‑supported tiers: players can access high‑quality experiences without paying large upfront fees, instead opting to view occasional ads. Importantly, the ad‑supported option would be entirely optional.
Those who prefer an uninterrupted experience could continue to pay for a subscription, while newcomers or cost‑conscious gamers could choose the free tier that includes advertisements. This two‑tier system is designed to retain loyal fans while simultaneously expanding the market to include players who might otherwise be excluded due to price. Although concrete survey data on this specific announcement is not yet available, it is reasonable to assume that most gamers would tolerate a short, 30‑second commercial if it granted them an hour of gameplay with a beloved or new title.
Happydemics’ data, derived from 285 in‑game campaigns across the United Kingdom and North America, consistently show that in‑game ads outperform traditional TV, social, and online placements when it comes to recall and attribution. Players are more likely to remember an ad they saw while playing and correctly associate it with the brand that served it.
Xbox’s “around‑the‑game” strategy—displaying ads before the game launches rather than embedding them within the gameplay itself—adds another layer of appeal. Our research indicates that these pre‑game placements generate higher ad recall and attribution rates compared with ads that appear directly inside the game world. While traditional in‑game formats excel at later‑stage funnel metrics such as brand lift, consideration, interest, and likability, pre‑game ads avoid disrupting immersion, which is a critical factor for both gamers and advertisers.
The success of this approach hinges on relevance. 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, well‑targeted ads, Xbox can keep players engaged rather than prompting them to quit the experience. At the same time, brands benefit from a highly attentive audience that is primed for interaction. Nevertheless, Xbox is navigating uncharted territory.
The company must gauge player reaction to pre‑game advertising and determine whether the revenue generated will justify a long‑term commitment to the model. The move reflects the boldness of Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with new business models. Only time will reveal whether the strategy delivers the desired outcomes. Historically, many gaming ad campaigns have relied on a “watch an ad, earn an extra life” premise.
Xbox’s proposal differs: users would watch an ad to gain access to a game they already own, rather than receiving an in‑game reward. Our existing data set does not yet indicate how this will be received, but broader research on ad format perception shows that descriptors such as “non‑intrusive” and “immersive” rank highly among positive responses. If Xbox can maintain these qualities, it will likely set a benchmark for future ad‑supported gaming initiatives.
In my view, Xbox will neither be the first nor the last platform to explore this hybrid model. Advertising within games is not new, but it has rarely been implemented with the player experience at the forefront.
Should Xbox succeed, it could pave the way for other developers and publishers to adopt similar strategies, ultimately making video games more accessible to everyday gamers and expanding the industry’s revenue toolbox.