Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform that specializes in advertising technology. For many years, the gaming community has viewed in‑game advertising with suspicion, and the wariness is understandable.
Historically, ads embedded in video games have suffered from a poor reputation, often because they redirect users to unrelated websites or apps, present misleading content, or feature hide‑away close buttons that are difficult to locate. These frustrations have left a sour taste in the mouths of many players. A recent study conducted by eMarketer highlighted just how sensitive gamers are to intrusive promotional material: 52 % of respondents said they would stop playing a title if they encountered multiple disruptive ad elements. Losing more than half of an audience at the very moment you try to engage them is clearly not a sustainable approach.
Nevertheless, advertisements do not have to be a negative experience. The same research revealed a more optimistic insight—one in five gamers indicated they would actually increase the frequency with which they played a game if the in‑game ads were of a high quality and felt relevant.
This suggests that, when executed correctly, advertising can enhance rather than detract from the gaming experience. Xbox is currently experimenting with an ad‑supported game‑streaming service at a time when the overall cost of playing is climbing steadily. In this environment, well‑crafted ads could find a welcoming home within the gaming ecosystem. The argument for introducing an “ads‑for‑games” model is stronger than many industry observers might assume, and it is already partially validated by the success of linear media platforms.
Services such as Netflix, Disney+, and other video‑streaming giants have demonstrated that offering a lower‑priced, ad‑supported tier can generate significant revenue while still delivering a consistent product. If Xbox’s pilot proves profitable, the company could not only preserve its existing subscription base but also unlock an entirely new, previously untapped revenue stream—a development that would be especially valuable given the brand’s current financial pressures.
This issue matters because console gaming is increasingly being positioned as a premium service. The price tags attached to new games, next‑generation consoles, accessories, and downloadable content (DLC) have risen to levels that many casual players find difficult to justify. These escalating costs create a barrier that keeps everyday gamers on the sidelines. Xbox itself has acknowledged that, when handled properly, advertising can help lower the cost of access to gaming.
The mobile gaming sector has already shown that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases. By offering a free or low‑cost entry point that is supported by advertisements, developers can broaden their audience without sacrificing revenue entirely. Importantly, the model remains optional. Players who prefer an uninterrupted experience can continue to pay for a subscription that removes ads altogether.
This two‑tier system is designed to retain loyal fans while simultaneously making games more approachable for newcomers who might otherwise be deterred by high entry costs. Although there is no specific survey data on Xbox’s latest announcement, it is reasonable to predict that a substantial majority of gamers would tolerate a short, 30‑second commercial if it meant they could play a beloved title or a brand‑new release for an hour without paying extra. Xbox’s own internal research likely supports this assumption. Happydemics has compiled data from 285 in‑game advertising campaigns across the United Kingdom and North America, revealing that in‑game ads consistently outperform traditional TV, social media, and online display ads in terms of recall and attribution.
In other words, players are more likely to remember an advertisement they saw while gaming and to correctly associate it with the brand that delivered it. Xbox’s “around‑the‑game” approach—where ads appear outside the actual gameplay, such as during loading screens or before a match begins—adds another layer of interest. Our data indicate that these pre‑game placements generate even higher recall and attribution rates compared with ads that are embedded directly within the game environment.
Why does this matter? While many of us can recall a commercial we saw on television or a sponsored post while scrolling through a feed, those memories do not always translate into a clear link to the brand. Gaming, by contrast, appears to create a stronger mental connection between the ad and the advertiser, which likely explains why companies like Xbox and Electronic Arts (EA) are increasingly exploring ad‑based monetization strategies.
It is crucial to note that Xbox’s ads are not meant to interrupt gameplay; they are positioned before the game starts. In‑game ad formats, on the other hand, tend to excel further down the marketing funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability. A hybrid model that combines both pre‑game and in‑game placements could theoretically offer the best of both worlds for advertisers, though it also runs the risk of provoking greater pushback from players who are sensitive to any form of interruption. Xbox has emphasized that the advertisements will be non‑intrusive, a claim that makes sense from a user‑experience standpoint.
By delivering ads prior to the start of a session, the company can avoid breaking the immersive flow that gamers cherish. This is beneficial not only for players but also for advertisers, who want their messages to be part of the experience rather than a disruptive annoyance. Relevance will be another key factor. No gamer wants to see an ad for cat food when they don’t own a cat, or an advertisement for a game they have already completed.
By ensuring that ads are contextual—matched to the player’s interests, location, or recent activity—Xbox can keep viewers engaged and prevent them from abandoning the service at the first sign of irrelevant content. For brands, this contextual relevance translates into a higher quality platform for reaching new audiences. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to a model that asks them to watch a commercial in order to access a game they already own. The second unknown is whether the ad revenue generated will be sufficient to justify a long‑term commitment to this strategy. The decision to explore ad‑supported game streaming reflects the boldness of Xbox CEO Asha Sharma, who has demonstrated a willingness to take calculated risks and experiment with new business models.
Only time will reveal whether this gamble pays off. Historically, many of our own gaming‑advertising projects have relied on a “watch an ad, earn an extra life” mechanic, where the ad provides a tangible in‑game benefit.
Xbox’s proposal is different: it asks players to watch an ad simply to launch a game they already own. Our existing data set does not yet provide clear insight into how this will be received. However, broader research on ad‑format perception shows that when participants are asked to describe the most appealing attributes of an ad experience, terms such as “non‑intrusive” and “immersive” consistently rank among the top choices. If Xbox—and any future adopters—aim to make advertising in gaming successful, these two metrics will need to be closely monitored.
Looking ahead, I anticipate that Xbox will not be the first nor the last major platform to experiment with ad‑supported gaming models. Advertising has been part of the gaming landscape for years, but it has often been implemented without the player’s best interests at heart. Should Xbox manage to strike the right balance—delivering ads that are relevant, non‑disruptive, and rewarding—it could pave the way for other companies to follow suit, ultimately making video games more affordable and accessible for the everyday gamer.