Virginie Chesnais serves as Chief Marketing Officer at the ad‑technology analytics firm Happydemics. She has long observed that many gamers view in‑game advertising with suspicion, and that wariness is not unfounded. Historically, ads embedded in video games have earned a mixed reputation, often because they redirect users to unrelated websites or apps, present misleading content, or feature close buttons that are difficult to locate.
Such experiences can feel intrusive and frustrating. A recent study conducted by eMarketer highlighted the severity of the issue: 52 % of respondents said they would abandon a game if they encountered multiple disruptive advertising elements.
Losing more than half of an audience at the moment you are trying to engage them is clearly a poor strategic move. However, advertisements do not have to be a detriment. The same research revealed a more optimistic finding: one in five gamers indicated they would play a title more often if the in‑game ads were of high quality and relevance.
This suggests that when executed properly, advertising can actually enhance the gaming experience rather than diminish it. Xbox is currently experimenting with an ad‑supported game‑streaming service, and the broader context is that the overall cost of playing video games continues to climb.
In this environment, well‑crafted ads could find a natural home within the gaming ecosystem. The rationale for introducing an ad‑based revenue model in gaming is bolstered by evidence from 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 expanding the audience base. If Xbox’s experiment proves successful, the company could not only preserve its subscription revenue but also unlock a fresh, previously untapped stream of earnings—a development the brand could certainly use given its recent financial pressures.
The significance of this shift lies in the fact that console gaming is increasingly being positioned as a premium service. Prices for games, consoles, accessories, and downloadable content have risen steadily, creating a financial barrier for the average consumer.
When Xbox announced its plans, it emphasized that, if handled correctly, advertising could lower the cost of entry for many players. Mobile gaming has already shown that ad‑supported tiers can provide a gateway for users who are unwilling or unable to make large upfront purchases. Crucially, the model remains optional. Players who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads, while those who are more price‑sensitive can opt into the ad‑supported tier.
By offering a two‑tier system, Xbox hopes to keep its loyal fan base satisfied while simultaneously making games more approachable for newcomers. Although there is currently no public survey data on reactions to Xbox’s specific announcement, it is reasonable to assume that a large majority of gamers would tolerate a short, 30‑second advertisement if it granted them an hour of gameplay in a beloved or new title. Xbox’s internal data likely supports this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America indicates that in‑game advertising consistently outperforms television, social media, and other online formats when it comes to ad recall and attribution.
In other words, players are more likely to remember an ad they saw while gaming and correctly associate it with the brand that displayed it. Xbox’s “around‑the‑game” approach—placing ads before the game starts rather than embedding them within the gameplay itself—adds another layer of interest. The data shows that these pre‑game formats achieve higher recall and attribution scores compared with intrinsic in‑game placements.
This distinction matters because while we may notice ads on TV or in a social feed, we do not always link them to a specific brand. Gaming, by contrast, appears to create a stronger mental connection between the ad and its sponsor, which explains why companies like Xbox and Electronic Arts are increasingly exploring ad‑based monetization. It is important to note that Xbox’s ads are not meant to interrupt the actual gameplay. By serving ads before the session begins, the company aims to preserve the immersive experience that gamers value.
This strategy benefits both players—who enjoy an uninterrupted session—and advertisers, who want their messages to be part of the experience rather than a nuisance. Relevance will be key. No gamer wants to see an advertisement for cat food when they do not own a cat, or for a game they have already completed.
Contextual, targeted ads that make sense in the moment are more likely to be accepted and less likely to cause players to quit the platform. Nonetheless, Xbox is venturing into largely uncharted territory.
The first unknown is how the gaming community will react to pre‑game advertising, and the second is whether the revenue generated will be sufficient to sustain the model over the long term. Xbox CEO Asha Sharma’s decision to explore ad‑supported streaming reflects a willingness to take calculated risks, but only time will reveal whether the approach will pay off.
Historically, many of our gaming‑ad campaigns have been built around a “watch an ad, earn an extra life” premise. Xbox’s proposal differs: players would watch an ad to gain access to a game they already own, rather than to receive a small in‑game reward.
Our existing data set does not yet indicate how this model will be received. Research on ad‑format perception shows that when participants are asked to describe ads they remember, terms such as “non‑intrusive” and “immersive” frequently emerge as positive descriptors. If Xbox and future adopters want to make gaming ads successful, these two qualities will be essential metrics to monitor.
In my view, Xbox will neither be the first nor the last platform to test this kind of hybrid monetization. Advertising has existed in games for years, but rarely with the player’s experience at the forefront of design.
Should Xbox manage to strike the right balance, it could pave the way for other developers and publishers to adopt similar models, ultimately making video games more affordable and accessible for everyday gamers.