Virginie Chesnais serves as Chief Marketing Officer at the ad‑tech analytics firm Happydemics. For years, many gamers have looked at in‑game advertising with suspicion, and their concerns are not unfounded.
The reputation of ads in video games is mixed; players often encounter redirects to unrelated sites or apps, misleading content, or hide‑away close buttons that are hard to locate, leading to frustration. A recent study by eMarketers highlighted that 52 % of gamers would abandon a session if they ran into several disruptive advertising elements. Losing half of your audience at the moment you’re trying to engage them is hardly an effective approach.
However, 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 high quality and relevance. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of playing games steadily climbing, well‑crafted ads could find a welcoming niche within the gaming ecosystem.
The argument for introducing a form of "ads‑for‑games" model is more compelling than many anticipate, and it has already been demonstrated to some extent by linear media. Platforms such as Netflix, Disney+, and other streaming services have proven that offering a lower‑priced, ad‑supported tier can generate significant revenue while keeping a broad subscriber base. Should Xbox’s experiment succeed, it would not only preserve its paying subscribers but also unlock a fresh, previously untapped revenue stream at a moment when the brand is eager for additional income. This development matters because console gaming is increasingly being positioned as a premium service.
The price tags attached to games, consoles, accessories, and downloadable content are rising, making it harder for the average consumer to justify the expense and creating a barrier for casual gamers. Xbox itself has noted that, when executed correctly, advertising can lower the cost of entry into gaming.
Mobile gaming has already shown that ad‑supported tiers can provide a gateway for players who are reluctant to make large upfront purchases. Crucially, the model remains optional. Players who prefer an ad‑free experience can continue to pay a subscription fee, while those who are comfortable with occasional ads can enjoy a reduced‑cost option. By offering a two‑tier system, Xbox hopes to retain its loyal fan base while simultaneously making games more accessible to newcomers.
Although there is no concrete survey data on this specific announcement yet, it is reasonable to assume that most gamers would tolerate a 30‑second advertisement if it meant gaining an hour of gameplay in a favorite or new title. Xbox’s own analytics are likely to confirm this hypothesis. Happydemics data covering 285 in‑game campaigns across the UK and North America reveal that in‑game ads consistently outperform television, social, and other online formats in terms of ad recall and attribution.
Players are more likely to remember an ad seen within a game and correctly associate it with the brand that displayed it. This is where Xbox’s "around‑the‑game" strategy—advertisements displayed before the game begins rather than embedded within the gameplay—becomes intriguing.
Our research indicates that pre‑game placements enjoy a clear advantage in recall and attribution compared with intrinsic in‑game placements. The distinction matters because, while we can often remember ads seen on TV or scrolling through social feeds, those memories do not always translate into brand recognition. Gaming appears to occupy a unique position on this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based gaming models.
It is important to note that Xbox’s ads are pre‑game, not in‑game. In‑game formats tend to excel further down the funnel, delivering stronger lifts in brand image, consideration, interest, and ad likability.
A hybrid approach that combines both pre‑game and in‑game ads could offer advertisers the best of both worlds, though it also risks provoking greater pushback from players. Xbox has assured users that the ads will be non‑intrusive.
By placing ads before the gameplay starts, the immersive experience remains uninterrupted—a key consideration for both gamers and advertisers who want their messages to complement, rather than disrupt, the experience. Relevance will be another critical factor. No player wants to see an ad for cat food when they don’t own a cat, or for a game they have already completed.
Contextual, targeted ads that make sense to the individual gamer will help prevent premature exits and give brands a more effective platform for reaching new audiences. Nevertheless, 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 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, many gaming ad campaigns have relied on "watch an ad, get an extra life" mechanics. Xbox’s proposition is different: players would watch an ad to access a game they already own.
Our existing data set does not yet indicate how this will be received. Nonetheless, research on ad‑format perception shows that when respondents recall an ad, they often describe the format as "non‑intrusive" and "immersive"—the two most popular positive descriptors.
If Xbox and future adopters aim to make gaming ads successful, these attributes will be essential metrics to monitor. My forecast is that Xbox will neither be the first nor the last platform to test such strategies.
Advertising in games has existed for a long time, 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 companies to follow, while simultaneously making video games more affordable and reachable for everyday players.