Virginie Chesnais serves as chief marketing officer at the ad‑tech analytics firm Happydemics. While many gamers have historically been skeptical of advertisements embedded in video games, their wariness is understandable. In‑game ads have earned a mixed reputation, often because they redirect users to unrelated websites or apps, feature misleading content, or present close buttons that are difficult to locate, leading to frustration. A recent study conducted by eMarketer highlighted that 52 % of gamers would abandon a session if they encountered multiple intrusive ad elements.
Losing half of an audience at the very moment you’re trying to engage them is hardly an effective approach. However, advertisements do not have to be a negative experience. The same research indicated that one in five gamers would actually increase the frequency with which they play 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 amid a steady climb in the cost of playing, the prospect of well‑crafted ads could find a welcoming niche in the gaming ecosystem. The argument for introducing an ads‑for‑games model is more compelling than many assume, especially when we look at the success of linear media. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that offering an ad‑supported tier alongside a premium subscription can generate substantial revenue while expanding the audience base. Should Xbox’s experiment prove successful, it could not only preserve its paying subscriber base but also unlock a brand‑new, previously untapped source of income—a crucial development for a brand that is currently seeking fresh financial streams.
The relevance of this shift is underscored by the fact that console gaming is increasingly being positioned as a premium service. Prices for games, consoles, accessories, and downloadable content continue to rise, creating a financial barrier for the average gamer.
Xbox itself has acknowledged that, when executed correctly, advertising can reduce the cost of entry to gaming. Mobile gaming has already shown that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases, thereby broadening the market.
Importantly, the ad‑supported option would be entirely optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads. By offering a two‑tier system, Xbox aims to keep its loyal fan base satisfied while simultaneously making games more accessible to newcomers who might otherwise be deterred by price. Although formal survey data on this particular announcement is not yet available, it is reasonable to predict that a large majority of gamers would tolerate a 30‑second advertisement if it granted them an hour of playtime on a beloved or new title.
Xbox likely has internal data supporting this assumption. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America reveals that in‑game advertisements consistently out‑perform 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 sponsoring brand. This is where Xbox’s “around‑the‑game” strategy—ads displayed before the game launches rather than embedded within the gameplay—becomes intriguing. Our data indicate that pre‑game placements achieve higher recall and attribution rates compared with ads that appear directly inside the game environment. While we can often recall ads seen on TV or scrolling through feeds, those impressions do not always translate into brand linkage.
Gaming appears to occupy a unique position in this regard, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based models. It is essential to note that Xbox’s ads are intended to be pre‑game, not intrusive during the actual play session. In‑game ad formats tend to excel further down the marketing funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability. A hybrid approach that combines both pre‑game and in‑game ads could theoretically provide advertisers with the best of both worlds, though it also risks greater pushback from players who value uninterrupted immersion.
Xbox has promised that the advertisements will be non‑intrusive. By placing ads before the game starts, the company aims to preserve the immersive experience that gamers cherish. This approach benefits both players—who avoid interruptions during gameplay—and advertisers, who want their messages to be part of a seamless experience rather than a disruptive one. Relevance will be key.
No gamer wants to see an ad for cat food if they don’t own a cat, or for a game they have already completed. Contextual, targeted ads that make sense for the individual player will help keep the experience pleasant and prevent users from abandoning the session at the sight of an irrelevant promotion. Nevertheless, Xbox is venturing into largely uncharted territory.
It must gauge player reaction to pre‑game ads and determine whether the revenue generated will be sufficient to sustain the model over the long term. The move toward ad‑supported streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who appears willing to experiment with new monetisation pathways.
Only time will reveal whether this strategy pays off. Historically, our work in gaming advertising has focused on “watch an ad, earn an extra life” mechanics.
Xbox’s proposal differs: it asks players to watch an ad to access a game they already own. Our existing data set does not yet capture how this particular trade‑off will be received. However, broader research on ad‑format perception shows that when participants are asked to describe ads they remember positively, terms such as “non‑intrusive” and “immersive” frequently emerge as top descriptors.
If Xbox—and potentially other platforms in the future—wish to make gaming ads successful, these two attributes will be critical metrics to monitor. My forecast is that Xbox will not be the first nor the last company to experiment with this model. Advertising within games has existed for years, but rarely with the player’s experience at the forefront. Should Xbox manage to strike the right balance, it could pave the way for similar initiatives across the industry, ultimately making video games more affordable and accessible for everyday players.