Virginie Chesnais serves as chief marketing officer at the ad‑technology analytics firm Happydemics. For many years, gamers have looked at in‑game advertising with suspicion, and that wariness is understandable. The reputation of ads in video games is mixed at best; players often encounter redirects to unrelated websites or apps, misleading content, or close buttons that are hard to locate, leading to frustration and annoyance. A recent study by eMarketer highlighted that 52 % of respondents would abandon a game if they were repeatedly exposed to intrusive ad elements.
Losing half of an audience at the moment you are trying to engage them is hardly an effective approach. However, 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 played a title if the in‑game ads were of a high quality and felt relevant. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, well‑crafted advertisements could find a welcoming niche within the ecosystem. The argument for a hybrid "ads‑for‑games" model is more compelling than many assume, and it already has a track record in linear media.
Platforms such as Netflix, Disney+ and other streaming services have demonstrated that offering an ad‑supported tier can generate a substantial revenue stream while still delivering a consistent product. Should Xbox’s experiment prove viable, it would not only preserve the existing subscriber base but also unlock a fresh, previously untapped source of income at a moment when the brand is seeking additional cash flow.
This is significant because console gaming is increasingly being positioned as a premium experience. Prices for games, consoles, accessories and downloadable content have risen sharply, making it harder for the average consumer to justify the expense and creating a barrier to entry for casual players. Xbox itself has stated that, when executed correctly, advertising can help lower the cost of access to gaming.
The mobile‑gaming sector already shows that ad‑supported tiers can provide a gateway for players who are unwilling or unable to pay large upfront fees. Crucially, the model remains optional. Players who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads. By offering a two‑tier system, Xbox hopes to keep its loyal fan base while simultaneously making games more attainable for newcomers.
Although there is no specific survey data on this particular rollout yet, it is reasonable to assume that the majority of gamers would tolerate a 30‑second commercial if it meant gaining an hour of playtime on a favorite or newly released title. Xbox’s own analytics are likely to confirm that hypothesis.
Happydemics data drawn from 285 in‑game campaigns across the UK and North America indicate that in‑game advertisements consistently outperform TV, social and standard online ads when it comes to recall and attribution. Players are more likely to remember an ad they saw while gaming and to correctly associate it with the brand that delivered it.
This is where Xbox’s "around‑the‑game" strategy—ads that appear before the game launches rather than embedded within the gameplay—becomes especially interesting. Our research shows that pre‑game placements enjoy a clear advantage in ad recall and brand attribution compared with intrinsic in‑game placements. The distinction matters because, while we can often recall ads seen on television or scrolling through social feeds, we do not always link those impressions to a specific brand.
Gaming appears to occupy a unique position in this regard, which likely explains why companies such as Xbox and EA are increasingly exploring ad‑based models. It is important to note that Xbox’s ads will not be embedded within the gameplay itself; they will be shown beforehand. Traditional in‑game formats tend to excel further down the 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 toolkit, though it also risks greater pushback from players who value an uninterrupted experience.
Xbox has assured users that the advertisements will be non‑intrusive. By placing ads before the game starts, the company aims to preserve the immersive nature of the session. This benefits both gamers, who avoid interruptions during play, and advertisers, who want their messages to be part of a positive experience rather than a disruptive one. Relevance will be key.
No player wants to see a commercial for cat food when they don’t own a cat, or an advertisement for a game they have already completed. By delivering contextual, well‑targeted ads, Xbox can keep players from abandoning the session while giving brands an effective platform to reach new audiences. Nonetheless, Xbox is venturing into largely uncharted territory. The first unknown is how gamers will react to the presence of ads, and the second is whether the revenue generated will be sufficient to sustain the model over the long term.
The move toward ad‑supported game streaming reflects a bold strategy by Xbox CEO Asha Sharma, who has shown a willingness to experiment and take calculated risks. Only time will reveal whether this approach delivers the desired outcomes.
Historically, our work in gaming advertising has focused on "watch an ad, get an extra life" type exchanges. Xbox’s proposal, however, asks players to view an ad in order to access a game they already own. Our existing data set does not yet indicate how this particular trade‑off will be received. Related research on ad‑format perception—where participants who recall an ad are asked to describe the format—has identified "non‑intrusive" and "immersive" as the most frequently chosen positive descriptors.
If Xbox and future adopters aim to make advertising in gaming a success, these two qualities will be essential metrics to monitor. My forecast is that Xbox will neither be the first nor the last platform to test this model.
Advertising has been part of gaming for years, but it has rarely been designed with the player’s experience at the forefront. Should Xbox manage to strike the right balance, it could pave the way for other companies to follow suit, ultimately making video games more affordable and accessible to everyday gamers.