Virginie Chesnais serves as chief marketing officer at the ad‑technology analytics firm Happydemics. For many years, gamers have approached in‑game advertising with skepticism, and that wariness is understandable.
The reputation of ads in video games is mixed: players often encounter redirects to unrelated websites or apps, deceptive messaging, and close buttons that are difficult to locate, all of which contribute to a frustrating experience. A recent study by eMarketer highlighted that 52 % of gamers would abandon a session if they were bombarded with multiple intrusive ad elements. Losing half of an audience at the moment you are trying to engage them is hardly an effective tactic. However, advertising does not have to be synonymous with annoyance.
The same research 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. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming steadily climbing, there is a genuine opportunity for well‑crafted ads to find a welcoming niche within the medium. The rationale for introducing a modest advertising component to games is more compelling than many might assume, 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 revenue while keeping a broad subscriber base.
Should Xbox’s experiment prove profitable, it could not only preserve the paying audience of its subscription service but also unlock a previously untapped income stream at a moment when the brand is eager for fresh cash flows. This development matters because console gaming is increasingly being positioned as a premium offering. The price tags on new consoles, full‑price games, accessories, and downloadable content (DLC) have risen to levels that many casual players find difficult to justify. These escalating costs create a barrier that keeps everyday gamers on the sidelines.
Xbox itself has acknowledged that, when executed correctly, advertising can help lower the cost of entry to gaming experiences. The mobile gaming sector already provides evidence that ad‑supported tiers can attract players who are unwilling or unable to make large upfront purchases, thereby expanding the overall market.
Importantly, any advertising model Xbox adopts would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are open to watching short commercials could enjoy a reduced price or even free access. By offering a two‑tier system, Xbox hopes to retain its loyal fan base while simultaneously making games more accessible to newcomers. Although concrete survey data on this particular rollout are not yet available, it is reasonable to assume that a significant majority of gamers would tolerate a 30‑second ad if it granted them an hour of gameplay in a beloved title or a brand‑new release.
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 indicate that in‑game advertisements consistently outperform traditional TV, social media, and online display ads in terms of recall and attribution.
In other words, players are more likely to remember an ad they saw while gaming and correctly associate it with the sponsoring brand. Xbox’s “around‑the‑game” approach—advertisements that appear before the gameplay begins rather than during the session—adds another layer of intrigue. Our research shows that pre‑game formats achieve higher ad recall and attribution scores compared with ads embedded directly within the game environment. This distinction matters because, while we may remember a commercial seen on television or while scrolling through a feed, we do not always link that memory to a specific brand.
Gaming appears to operate in a league of its own regarding this metric, which may explain why companies like Xbox and Electronic Arts are increasingly exploring ad‑based revenue models. It is crucial to note that Xbox’s ads are planned to be pre‑game rather than in‑game. In‑game formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and ad likability. A hybrid strategy that combines both pre‑game and in‑game placements could theoretically offer advertisers the best of both worlds, but it also risks provoking greater pushback from players who are sensitive to interruptions.
Xbox has pledged that any ads will be non‑intrusive. By placing commercials before the actual gameplay, the company aims to preserve the immersive experience that gamers value. This consideration benefits not only the players but also the advertisers, who want their messages to complement rather than disrupt the gaming session. Relevance will be another key factor.
No gamer wants to see an advertisement for cat food when they don’t own a cat, or for a game they have already completed. By delivering contextually appropriate ads—perhaps tied to the genre of the game, the player’s interests, or upcoming releases—Xbox can keep viewers engaged and prevent them from abandoning the session at the first sign of an irrelevant commercial. Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how players will react to this new ad format; the second is whether the revenue generated will be sufficient to sustain the model over the long term.
The decision to explore ad‑supported streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has shown a willingness to experiment with innovative business models. Only time will reveal whether this gamble pays off. Historically, many gaming ad campaigns have followed a "watch an ad, earn an extra life" paradigm.
Xbox’s proposal is different: players would watch an ad to gain access to a game they already own, rather than receiving a direct in‑game reward. Our existing data set does not yet provide insight into how this particular exchange will be received.
Research on ad format perception does, however, indicate that when respondents are asked to describe ads they remember positively, terms like "non‑intrusive" and "immersive" frequently appear among the top descriptors. If Xbox—and potentially other platforms in the future—aims to make advertising a staple of the gaming experience, these two qualities will be essential metrics to monitor. My forecast is that Xbox will neither be the first nor the last major console manufacturer to trial such a strategy. Advertising has been part of gaming for years, but rarely with the player’s convenience at the forefront.
Should Xbox succeed in delivering a seamless, optional ad experience, it could pave the way for other companies to adopt similar models, ultimately making video games more affordable and accessible for the everyday gamer.