Virginie Chesnais serves as chief marketing officer at the ad‑tech analytics firm Happydemics. For many years, gamers have been skeptical about advertisements embedded in video games, and their concerns are not unfounded. The reputation of in‑game ads is mixed, often marred by redirects to unrelated websites or apps, misleading content, and hard‑to‑find close buttons that frustrate users.
A recent study from eMarketers highlighted that 52 % of players would abandon a title if they encountered several intrusive ad elements. Losing half of your audience at the moment you are trying to engage them is hardly an effective approach. Yet, advertisements do not have to be a nuisance.
The same research revealed that one in five gamers would actually increase the frequency with which they play a game if the ads presented were of high quality and relevance. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of playing continuing to climb, well‑crafted advertisements could find a natural home in the gaming ecosystem. The argument for introducing a modest ad‑based revenue model is more compelling than many anticipate, especially when we look at the success of linear media platforms.
Services such as Netflix, Disney+ and other streaming giants have demonstrated that offering both ad‑free and ad‑supported tiers can generate substantial income while retaining a broad subscriber base. Should Xbox’s experiment prove successful, it would not only preserve its paying customers but also unlock a fresh, previously untapped revenue stream at a moment when the company’s finances could benefit from diversification. The relevance of this development is underscored by the fact that console gaming is increasingly positioned as a premium experience.
Prices for games, consoles, accessories and downloadable content have risen steadily, making it harder for the average consumer to justify the expense. This creates a barrier that keeps many potential players on the sidelines. Xbox itself has acknowledged that, when executed correctly, advertising can lower the barrier to entry and make gaming more accessible. We have already observed this phenomenon in mobile gaming, where ad‑supported tiers allow users to engage with titles without paying large upfront fees.
The model provides a gateway for newcomers to experience games before committing financially. Importantly, participation remains optional: players 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 happy while simultaneously opening the door for a broader audience.
Although no formal survey data on Xbox’s latest initiative is available yet, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it granted them an hour of gameplay in a favorite or new title. Xbox’s internal analytics are likely to confirm this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertisements consistently outperform television, social media, and other online formats in terms of recall and attribution. Players tend to remember ads that appear within the gaming environment and correctly associate them with the sponsoring brand.
Moreover, Xbox’s “around‑the‑game” approach—where ads are displayed before the game launches rather than during gameplay—demonstrates an even stronger advantage in recall and attribution compared with ads that appear directly inside the game world. This distinction matters because, while we can often recall ads seen on TV or scrolling through a feed, we do not always link those impressions to the correct brand. Gaming appears to occupy a unique space where ad recall translates more directly into brand awareness, which likely explains why companies like Xbox and Electronic Arts are increasingly exploring ad‑based revenue models.
It is crucial to note that Xbox’s plan involves pre‑game ads, not intrusive in‑game interruptions. Pre‑game placements avoid breaking immersion, preserving the player’s experience while still delivering the advertiser’s message. In‑game ad formats, on the other hand, tend to excel later in the marketing funnel, boosting brand‑image uplift, consideration, interest, and overall likability. A hybrid strategy that combines both pre‑game and in‑game ads could offer advertisers a comprehensive solution, though it may also invite greater pushback from players if not handled delicately.
Xbox has pledged that any advertisements will be non‑intrusive. By positioning ads before the gameplay begins, the company aims to keep the core experience seamless. This is beneficial not only for gamers but also for advertisers, who want their campaigns to feel like a natural part of the experience rather than a disruptive interruption.
Relevance will be key. No player wants to see an ad for cat food when they have no feline companion, or an advertisement for a game they have already completed. Contextual, targeted ads that make sense in the moment will help prevent players from abandoning the session and will give brands a high‑quality platform to reach new audiences. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how the gaming community 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 to test ad‑supported game streaming reflects a bold, risk‑taking attitude from Xbox CEO Asha Sharma, who appears willing to experiment with innovative monetisation strategies.
Historically, many gaming ad programs have relied on “watch an ad, earn an extra life” mechanics. Xbox’s proposition differs: players would watch an ad to access a game they already own, rather than to gain a reward. Our current data set does not yet reveal how this will be received, but research on ad‑format perception indicates that descriptors such as “non‑intrusive” and “immersive” rank highly among positive responses. If Xbox, and potentially other platforms in the future, can deliver ads that meet these criteria, they will be well‑positioned for success.
My forecast is that Xbox will neither be the first nor the last major player to experiment with this approach. Advertising has long existed in games, but often without the player’s experience as a central consideration. Should Xbox manage to implement a model that respects gamers while generating revenue, it could pave the way for similar initiatives across the industry and make video games considerably more affordable for everyday players.