Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and their wariness is understandable. The reputation of ads in video games is mixed at best, with common complaints ranging from redirects to unrelated websites or apps, misleading content, and the frustration of trying to locate a tiny, often hidden close button.
A recent study conducted by eMarketer revealed that 52 percent of gamers would abandon a session if they encountered several disruptive advertising elements. Losing half of your audience at the moment you are trying to engage them is clearly a poor tactic. However, advertisements do not have to be a negative experience. The same research indicated that one in five players would actually increase the frequency with which they played 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 continuing to climb, well‑crafted advertisements could find a receptive home in the gaming ecosystem. The logic behind offering an ad‑supported tier for games mirrors the model that has already proven successful in linear media. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that a stable subscription revenue stream can be complemented by a lower‑priced, ad‑supported option that attracts a broader audience. Should Xbox’s experiment succeed, it would not only preserve its existing subscriber base but also unlock a previously untapped source of revenue at a moment when the brand is seeking fresh income streams.
This development is significant because console gaming is increasingly being positioned as a premium experience. The price tags attached to new consoles, blockbuster games, accessories, and downloadable content (DLC) are steadily rising, making it more difficult for the average consumer to justify the expense. As Xbox itself has noted, when executed correctly, advertising can reduce the barrier to entry and make gaming more affordable for a wider range of players. The mobile gaming sector has already shown that ad‑supported tiers can provide a viable entry point for users who are reluctant to pay large upfront fees.
Players can enjoy a game for free or at a reduced cost, provided they agree to view advertisements. Importantly, this model is entirely optional; those who prefer an uninterrupted experience can still opt for a paid subscription that removes ads. By offering a two‑tier system, Xbox aims to keep its loyal fan base satisfied while simultaneously opening the door for newcomers who might otherwise be priced out.
Although there is no specific survey data on Xbox’s latest announcement, it is reasonable to assume that a large majority of gamers would tolerate a short, 30‑second commercial if it granted them an hour of gameplay in a beloved or new title. Xbox’s internal analytics are likely to confirm this hypothesis.
Data from Happydemics covering 285 in‑game campaigns across the United Kingdom and North America demonstrate that in‑game advertising consistently outperforms traditional TV, social, and online ads in terms of recall and attribution. In other words, gamers are more likely to remember an ad they see while playing and correctly associate it with the brand that displayed it.
This advantage becomes even more pronounced when ads are placed "around the game"—for example, in the loading screen or before the gameplay begins—rather than being embedded directly within the game world. Our research shows that these pre‑game placements generate higher ad recall and stronger brand attribution compared with intrinsic in‑game placements.
The distinction matters because, while we may remember a television commercial or a banner on a social feed, that memory does not always translate into a clear link to the advertised brand. Gaming appears to occupy a unique space where ad recall and brand association are particularly strong, which likely explains why companies like Xbox and Electronic Arts (EA) are exploring ad‑based monetisation strategies. It is crucial to note that Xbox’s plan centres on pre‑game ads rather than intrusive in‑game interruptions. Pre‑game formats preserve the immersive experience by delivering advertisements before the player is fully engaged with the title.
This approach benefits both the gamer—who enjoys an uninterrupted session—and the advertiser, who wants their message to be part of a seamless experience rather than a disruptive nuisance. Relevance will be a key factor in the success of these ads. No player wants to see an advertisement for cat food when they do not own a cat, or for a game they have already completed. By ensuring that ads are contextually appropriate and tailored to the individual’s interests, Xbox can minimise the risk of players abandoning the session at the sight of an irrelevant commercial, while providing brands with a highly targeted platform to reach new audiences.
Nevertheless, Xbox is navigating uncharted waters. The first unknown is how players will react to the presence of ads in a console environment that has traditionally been ad‑free. The second unknown is whether the advertising revenue generated will be sufficient to justify maintaining the model as a long‑term offering. The decision to explore ad‑supported game streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with new business models.
Only time will reveal whether this strategy will achieve its intended outcomes. Historically, many of our gaming‑ad campaigns have relied on a "watch an ad, get an extra life" premise, where the reward is a tangible in‑game benefit.
Xbox’s proposal, however, asks players to watch an ad in order to access a game they already own. Our existing data set does not yet provide insight into how this particular trade‑off will be received.
Research on ad‑format perception—where participants who recall an ad are asked to select adjectives that best describe the experience—has consistently highlighted "non‑intrusive" and "immersive" as the most favourable descriptors. If Xbox and other future adopters wish to make advertising a lasting component of the gaming experience, they will need to focus closely on these two metrics.
In my view, Xbox will neither be the first nor the last platform to test this approach. Advertising in video games has existed for many years, but it has often been implemented without the player’s experience as the primary consideration. Should Xbox manage to strike the right balance—delivering relevant, non‑intrusive ads that complement rather than disrupt gameplay—it could set a precedent for other companies and, more importantly, make video games significantly more accessible to everyday gamers.