Virginie Chesnais serves as the Chief Marketing Officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and that wariness isn’t unfounded. The reputation of ads in video games is mixed at best, with common complaints ranging from redirects to unrelated websites, misleading creative, and hide‑away close buttons that are difficult to locate. A recent study by eMarketer highlighted that 52 percent of players would stop playing if they encountered several intrusive ad elements.
Losing half of your audience at the moment you’re trying to engage them is hardly a winning tactic. However, advertisements don’t 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 high‑quality and well‑executed. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, there is a genuine opportunity for premium‑grade ads to find a natural home inside the gaming 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.
Services such as Netflix, Disney+, and other streaming platforms have demonstrated that a tiered approach—offering both ad‑free and ad‑supported options—can generate significant revenue while still delivering a reliable service. Should Xbox’s experiment prove successful, it could preserve its subscription base and unlock an entirely new, previously untapped revenue stream at a moment when the company is eager for fresh income. This development matters because console gaming is increasingly being positioned as a premium offering.
Prices for games, consoles, accessories, and downloadable content have risen steadily, making it harder for the average consumer to justify the expense and creating a barrier for casual gamers. Xbox itself has stated that, when executed correctly, advertising can reduce the cost of entry to gaming. Mobile gaming has already shown that ad‑supported tiers can give players a foothold in the market without demanding a large upfront purchase.
Importantly, the model would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those willing to tolerate a short commercial break could access the same content for free or at a reduced price.
By offering a two‑tier system, Xbox hopes to keep its loyal fan base intact while simultaneously widening its reach to newcomers. Although there is no concrete survey data on this particular rollout yet, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it meant they could play a favorite title or try out a new release for an hour.
Xbox’s internal data likely supports that assumption. 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.
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—showing ads before the game launches rather than embedding them within the gameplay—adds another layer to this advantage. Our data show that pre‑game placements achieve higher recall and attribution scores than intrinsic in‑game slots. This distinction is crucial because, while we may recall ads that appear on TV or in a social feed, those memories do not always translate into brand association.
Gaming appears to sit in a league of its own for this metric, which explains why companies like Xbox and EA are increasingly exploring ad‑based models. It’s worth noting that Xbox’s ads are not meant to interrupt the actual gameplay; they will appear before the session begins. Traditional in‑game formats tend to excel further down the funnel, delivering stronger lifts in brand image, consideration, interest, and likability. A blended strategy that combines both pre‑game and in‑game placements could be ideal for advertisers, though it might also provoke more resistance from players.
Xbox has pledged that the ads will be non‑intrusive. By delivering commercials before the game starts, the immersive experience remains untouched, which benefits both the player and the advertiser. Advertisers want their messages to feel like part of the overall experience, not a jarring interruption. 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. Contextual, targeted ads that make sense in the moment will help prevent players from abandoning the session and will give brands a more effective platform for reaching new audiences. Nevertheless, Xbox is navigating uncharted waters.
The first unknown is how players will react to these pre‑game spots; 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 new business models.
Only time will reveal whether the strategy delivers the desired results. Historically, our work in gaming advertising has focused on "watch an ad, earn an extra life" type exchanges. Xbox is proposing a different trade‑off: watch an ad to gain access to a game you already own.
Our existing data set does not yet tell us how this will be received. Related research on ad‑format perception—where respondents who remember an ad are asked to choose descriptive adjectives—has consistently highlighted "non‑intrusive" and "immersive" as the most valued qualities.
If Xbox and future adopters want to make advertising in gaming a success, these two attributes will need to be front‑and‑center. My forecast is that Xbox will neither be the first nor the last platform to test this approach. Advertising in video games has existed for many years, but it has rarely been designed with the player’s experience as the primary focus. Should Xbox manage to strike the right balance, it could pave the way for other publishers to follow suit, ultimately making video games more affordable and accessible for everyday players.