Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and that wariness is not unfounded. The reputation of ads inside video games is mixed at best, often plagued by issues such as redirects to unrelated sites or apps, misleading content, and hide‑away close buttons that frustrate users. A recent study conducted by eMarketer revealed that 52 % of respondents would stop playing a title if they encountered several disruptive advertising elements.
Losing half of an audience at the very moment you try to engage them is hardly a winning formula. 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 played a game if the in‑game ads were high‑quality and unobtrusive.
With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming climbing steadily, well‑crafted advertisements could find a welcoming niche within the ecosystem. The argument for a hybrid "ads‑for‑games" model is stronger than many assume, and it already shows promise in the world of linear media. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that offering both ad‑free and ad‑supported tiers can generate substantial revenue while keeping a broad subscriber base. Should Xbox’s experiment succeed, it could not only preserve its paying subscribers but also unlock a completely new revenue stream—something the brand could certainly use at this stage.
This development matters because console gaming is increasingly being positioned as a premium product. The price tags on new consoles, full‑price games, accessories, and downloadable content (DLC) are climbing, creating a financial hurdle for the average player and limiting market expansion.
Xbox itself has claimed that, when executed correctly, advertising can lower the barrier to entry for gamers. Mobile gaming already provides a clear precedent: ad‑supported tiers let players experience titles without paying large upfront fees, often in exchange for short video ads or rewarded offers.
Importantly, participation would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are price‑sensitive could opt into the ad‑supported tier. By offering a two‑track system, Xbox hopes to keep its core fan base happy while simultaneously attracting newcomers who might otherwise be priced out.
Although we lack direct survey data on the latest Xbox announcement, it is reasonable to assume that a large 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’s internal data likely supports this hypothesis. Happydemics analyzed 285 in‑game advertising campaigns across the United Kingdom and North America and found that in‑game ads consistently outperformed television, social media, and other digital formats in terms of recall and attribution.
Players were more likely to remember the brand behind an ad that appeared within a game and to correctly associate it with the advertiser. This is where Xbox’s “around‑the‑game” strategy—ads displayed before a gaming session begins rather than embedded within the gameplay—becomes intriguing.
Our research indicates that pre‑game placements generate higher recall and attribution scores compared with ads that appear directly inside the game world. The distinction matters because, while we can often recall ads seen on TV or scrolling through feeds, we do not always link those impressions to a specific brand. Gaming appears to occupy a unique position where ad recall translates more directly into brand awareness, which likely explains why companies like Xbox and EA are exploring ad‑based revenue models. It is essential to note that Xbox’s plan focuses on pre‑game ads, not intrusive in‑game interruptions.
In‑game ad formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability. A blended approach—combining pre‑game and in‑game ads—could theoretically give advertisers the best of both worlds, though it might also provoke greater resistance from players.
Xbox has promised that the ads will be non‑intrusive. By placing them before the actual gameplay starts, the company aims to preserve the immersive experience that gamers value.
This approach benefits both players, who enjoy an uninterrupted session, and advertisers, who want their messages to feel like a natural part of the experience rather than a disruption. Relevance will be key. No gamer wants to see an advertisement for cat food when they don’t own a cat, or a promotion for a game they have already completed. Contextual, targeted ads that make sense for the individual player will help prevent premature exits and give brands a more effective platform to reach fresh audiences.
Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how players will react to a new advertising model; the second is whether the revenue generated will be sufficient to sustain the initiative over the long term. The move toward ad‑supported streaming appears to be a calculated risk taken by Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with bold ideas. Only time will reveal whether the strategy delivers the intended results.
Historically, our work in gaming advertising has centered on "watch an ad, earn an extra life" mechanics. Xbox’s proposal, however, asks players to watch an ad to access a game they already own—a different proposition altogether. Our existing data set does not yet indicate how this will be received. Related research on ad‑format perception shows that when respondents are asked to describe ads they remember positively, terms like "non‑intrusive" and "immersive" frequently surface.
If Xbox and future industry players aim to make advertising a lasting component of gaming, these two attributes will be critical performance indicators. My forecast is that Xbox will neither be the first nor the last platform to experiment with this model.
Advertising in games has existed for years, but it has rarely been designed with the player’s experience as the primary focus. Should Xbox manage to strike the right balance, it could pave the way for other studios to follow, ultimately making video games more affordable and accessible for everyday gamers.