Virginie Chesnais serves as chief marketing officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have approached in‑game advertising with suspicion, and that wariness is understandable. The reputation of ads in video games is mixed, often marred by redirects to unrelated sites, misleading content, or hidden close buttons that frustrate users. A recent study by eMarketer highlighted that 52 % of players would abandon a session if they encountered several intrusive ad elements.
Losing half of your audience at the moment you’re trying to engage them is hardly an effective tactic. However, advertisements do not have to be detrimental. The same research revealed that one in five gamers would actually increase the frequency with which they play a title 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 continuing to climb, well‑crafted ads could find a receptive home inside the gaming ecosystem. The argument for a hybrid "ads‑for‑games" model is more compelling than many anticipate, especially when we look at the success of linear media. Platforms such as Netflix, Disney+, and other streaming services have demonstrated that offering both ad‑free and ad‑supported tiers can generate significant revenue while keeping a broad subscriber base.
Should Xbox’s experiment prove viable, it could not only preserve its paying subscribers but also unlock a fresh, previously untapped income stream—a development the company could greatly benefit from at this juncture. This is crucial because console gaming is increasingly positioning itself as a premium product. Prices for games, consoles, accessories, and downloadable content have risen sharply, making it harder for the average consumer to justify the expense and erecting a barrier to entry for casual gamers.
Xbox itself has stated that, when executed correctly, advertising can lower the cost of accessing games. Mobile gaming already offers a precedent: ad‑supported tiers allow players to engage with titles without paying large upfront fees, expanding the market to users who might otherwise stay away.
Importantly, the approach remains optional. Players who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads. By providing a two‑tier system, Xbox hopes to keep its loyal fan base while simultaneously making games more approachable for newcomers.
Although there is no specific survey data on this particular rollout yet, it is reasonable to assume that a majority of gamers would tolerate a 30‑second commercial if it meant they could play a favorite or new title for an hour. Xbox likely has internal data supporting that assumption.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertising consistently outperforms television, social, and other online formats in terms of recall and attribution. Players are more likely to remember an ad they saw while playing and correctly associate it with the brand that delivered it.
This is where Xbox’s "around‑the‑game" strategy—ads displayed before the game launches rather than embedded within gameplay—becomes particularly interesting. Our data indicate that pre‑game placements achieve higher recall and attribution scores compared with intrinsic in‑game placements. The distinction matters because, while we may notice ads on TV or social feeds, we do not always connect those impressions to specific brands.
Gaming appears to operate in its own league for this metric, which likely explains why companies such as Xbox and EA are increasingly exploring ad‑based gaming models. It is essential to note that Xbox’s ads are pre‑game, not in‑game.
Traditional in‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and likeability. A combined approach—leveraging both pre‑game and in‑game ads—could provide advertisers with a powerful toolbox, though it may also provoke greater resistance from players. Xbox has pledged that the ads will be non‑intrusive.
By placing commercials before the gameplay begins, the company aims to preserve the immersive experience that gamers value. This consideration benefits both the player, who avoids disruption, and the advertiser, whose message integrates smoothly into the overall experience.
Relevance will be key. No one wants to see an advertisement for cat food when they don’t own a cat, or for a game they have already completed.
Contextual, targeted ads that make sense for the individual player will help prevent abandonment and give brands a premium platform for reaching fresh audiences. Nevertheless, Xbox is navigating uncharted territory. It must gauge how players will react to this new format and determine whether the revenue generated will justify making ad‑supported streaming a permanent feature. The move to explore ad‑supported game streaming reflects the boldness of Xbox CEO Asha Sharma, who has shown a willingness to experiment with unconventional strategies.
Only time will reveal whether this gamble pays off. Historically, many gaming ad models have followed a "watch an ad, earn an extra life" premise.
Xbox’s proposal differs: 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. Related research on ad format perception—asking respondents who recall an ad to describe the format with positive adjectives—has consistently highlighted "non‑intrusive" and "immersive" as top descriptors.
If Xbox and future adopters aim to make gaming ads successful, these two attributes should be central to their design and measurement. In my view, Xbox will neither be the first nor the last platform to test such a model.
Advertising has been part of gaming for years, but it has rarely been crafted with the player’s experience at the forefront. Should Xbox manage to strike the right balance, it could open a pathway for other companies and, more importantly, make video games considerably more accessible to the everyday gamer.