Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform focused 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; players often encounter redirects to unrelated websites or apps, deceptive messaging, or tiny close buttons that are difficult to locate, leading to frustration.
A recent study conducted by eMarketer revealed that 52 % of respondents would stop playing a title if they ran into several intrusive ad elements. Losing half of an audience at the moment you’re trying to engage them is hardly an effective approach. However, advertisements do not have to be detrimental.
The same research indicated that one in five gamers would actually increase the frequency with which they played a game if the in‑game ads were of high quality and relevance. With Xbox presently piloting an ad‑supported game‑streaming service, and the overall cost of gaming steadily climbing, well‑crafted advertisements could find a welcoming niche within the gaming ecosystem. The argument for a hybrid "ads‑for‑games" model is more compelling than many assume, especially when we look at the success of linear media.
Platforms such as Netflix, Disney+, and other streaming services have demonstrated that offering an ad‑supported tier can generate significant revenue while still delivering a reliable service. Should Xbox’s experiment succeed, it would not only preserve its subscription base but also unlock a fresh, previously untapped income stream—a development that could be crucial for the brand at this juncture. This is significant because console gaming is increasingly being positioned as a premium experience. Prices for games, consoles, accessories, and downloadable content have risen to the point where many casual players find them hard to justify, creating a barrier to entry for the average consumer.
Xbox itself has stated that, when executed correctly, advertising can lower the cost of accessing games. The mobile gaming sector already provides evidence that ad‑supported tiers can give players a gateway into the medium without demanding large upfront payments.
Importantly, the model remains optional. Players who prefer an ad‑free environment can continue to enjoy that choice by paying a subscription fee.
By offering a two‑tier system, Xbox hopes to keep its loyal fan base while simultaneously making games more approachable for newcomers. Although there is currently no specific survey data on this particular rollout, it is reasonable to predict that a large majority of gamers would tolerate a 30‑second commercial if it granted them an hour of playtime on a favorite or brand‑new title. Xbox’s internal data likely supports this assumption. Happydemics analyzed 285 in‑game campaigns across the United Kingdom and North America and found that in‑game advertisements consistently outperformed TV, social, and online ads in terms of recall and attribution.
Players were more likely to remember the ad and correctly associate it with the sponsoring brand. This is where Xbox’s "around‑the‑game" strategy—ads displayed before the gameplay begins rather than embedded within the game world—becomes intriguing. Our research shows that pre‑game placements deliver a clear advantage in ad recall and attribution when compared with intrinsic in‑game placements.
The distinction matters because, while we may recall ads seen on television or scrolling through social feeds, that memory does not always translate into a clear brand link. Gaming appears to operate in its own league for this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based gaming models. It is essential to note that Xbox’s ads are not in‑game but pre‑game.
Traditional in‑game formats tend to excel further down the funnel, boosting brand image, consideration, interest, and likeability. A combination of pre‑game and in‑game ads could theoretically offer advertisers the best of both worlds, though it may also provoke greater pushback from players.
Xbox has pledged that the advertisements will be non‑intrusive. By placing ads before the game starts, the immersive experience remains uninterrupted—a factor that matters not only to gamers but also to advertisers who want their messages to complement rather than disrupt the experience. 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. Contextual, targeted ads that provide a clear rationale for their appearance can keep players from abandoning the session while giving brands a premium platform to reach new audiences.
Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how players will react to this new ad format; 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. Only time will reveal whether this approach delivers the intended results.
Historically, our work in gaming advertising has centered on "watch an ad, get an extra life" type incentives. Xbox’s proposition is different: players watch an ad to access a game they already own. Our existing data set does not yet indicate how this will be received.
Related research on ad‑format perception—asking participants who recall an ad to select positive descriptors—has consistently highlighted "non‑intrusive" and "immersive" as top‑rated attributes. If Xbox and future adopters aim to make gaming ads successful, these two qualities will need to be closely monitored. My forecast is that Xbox will neither be the first nor the last company to test such a strategy. 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 other developers to follow, ultimately making video games more affordable and accessible for everyday gamers.