Virginie Chesnais serves as chief marketing officer at the ad‑technology analytics firm Happydemics. For many years, gamers have been skeptical of advertising that appears within games, and their concerns are not unfounded. In‑game ads have earned a reputation for being intrusive, often redirecting users to unrelated websites or apps, delivering misleading content, or presenting close buttons that are difficult to locate.
A recent study by eMarketer highlighted that 52 percent of players would abandon a session if they encountered multiple disruptive ad elements, indicating that losing half of an audience at the moment of engagement is far from an effective approach. However, advertising does not have to be a negative experience. The same survey revealed that one in five gamers would actually increase the frequency with which they play a title if the in‑game advertisements were of high quality and relevance.
This suggests that, when executed thoughtfully, ads can enhance rather than detract from the gaming experience. Xbox is currently experimenting with an ad‑supported game‑streaming service at a time when the overall cost of gaming is on an upward trajectory. High‑quality, well‑targeted ads could therefore find a receptive home within the console ecosystem.
The business case for an ads‑for‑games model is stronger than many assume, and it has already been demonstrated in the realm of linear media. Platforms such as Netflix, Disney+, and other streaming services have shown that offering both ad‑free and ad‑supported tiers can generate substantial revenue while keeping a broad subscriber base.
If Xbox’s experiment proves profitable, the company could not only preserve its existing paying subscribers but also unlock an entirely new revenue stream—something the brand could certainly use given its recent financial pressures. The significance of this development lies in the fact that console gaming is increasingly positioned as a premium service. Prices for games, consoles, accessories, and downloadable content continue to climb, creating a financial barrier for the average player.
Xbox itself has acknowledged that, when handled correctly, advertising can lower the cost of entry to gaming. Mobile gaming already provides a clear example: ad‑supported tiers let players experience games without the need for large upfront payments, thereby expanding the market. Crucially, the ad‑supported option would be entirely optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those who are comfortable with occasional advertisements could enjoy a lower‑cost entry point.
This two‑tier system aims to retain loyal fans while simultaneously attracting newcomers who might otherwise be deterred by high price tags. Although no formal survey data exists yet on Xbox’s specific proposal, it is reasonable to assume that the majority of gamers would tolerate a brief 30‑second commercial if it granted them an hour of gameplay on a favorite or new title. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that in‑game ads consistently outperform television, social media, 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 displayed it.
Xbox’s “around‑the‑game” strategy—showing ads before the game launches rather than embedded within the gameplay—adds another layer of appeal. Our data indicate that pre‑game placements achieve higher recall and attribution scores compared with intrinsic in‑game placements. This distinction matters because, while we can often recall ads seen on TV or social feeds, we do not always link them to the corresponding brands. Gaming appears to operate in a different league for these metrics, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based models.
It is important to note that Xbox’s ads would not interrupt the actual gameplay; they would appear in the pre‑game lobby or loading screen. In‑game formats, by contrast, tend to excel further down the funnel, delivering stronger lifts in brand image, consideration, interest, and likeability.
A hybrid approach that combines both pre‑game and in‑game ads could offer advertisers the best of both worlds, though it also risks greater pushback from players who value an uninterrupted experience. Xbox has promised that the advertisements will be non‑intrusive. By confining ads to the moments before a game starts, the company hopes to preserve the immersive nature of the experience. This is beneficial not only for players but also for advertisers, who want their messages to feel like a natural part of the environment rather than a jarring interruption.
Relevance will be key. No gamer wants to see an ad for cat food when they do not own a cat, or a promotion for a game they have already completed. Contextual, targeted ads that make sense within the player’s profile will reduce the likelihood of users abandoning the session and will provide brands with a high‑quality platform to reach new audiences. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to pre‑game advertising; 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, risk‑taking mindset from Xbox CEO As ha Sharma, who has demonstrated a willingness to experiment with new business models. Only time will reveal whether this strategy delivers the intended results.
Historically, many gaming ad campaigns have relied on a "watch an ad, get an extra life" mechanic, offering a tangible in‑game reward for the viewer’s time. Xbox’s proposal differs: players would watch an ad to gain access to a game they already own, rather than receiving a direct in‑game benefit.
Our existing data set does not yet indicate how this approach will be received. Research on ad‑format perception, however, provides useful insight. When participants who remembered an ad were asked to describe the format, descriptors such as "non‑intrusive" and "immersive" ranked among the most popular. If Xbox—and potentially other platforms in the future—aim to make advertising a permanent fixture in gaming, these two attributes will be critical metrics to monitor.
My forecast is that Xbox will neither be the first nor the last major console provider to test ad‑supported models. Advertising in games is not a new concept, but it has rarely been implemented with the player’s experience as the primary focus. Should Xbox succeed in delivering ads that feel seamless, relevant, and optional, it could pave the way for other developers and publishers to follow suit, ultimately making video games more affordable and accessible for everyday gamers.