Xbox doesn't want to 'cram ads into everything,' still sees advertising as new opportunity

Xbox management continues hinting at ads coming to its games and services in some form, and new comments from management emphasize the importance of making things non-invasive.

2

Ads are coming to gaming, and apparently soon. But how this will actually happen remains unclear; will companies show ads during loading screens? Will real-life restaurants like Pizza Hut and products like Monster energy drinks show up more often in games? And what about interstitial ads--do those have a place?

Xbox is currently testing a free ad-supported tier of Xbox Cloud Gaming, and it could lead to new monetization avenues. Users watch a few ads and in exchange they get hours of playtime game streaming in return. Now Xbox's new chief strategy officer comments further on how ads could help stabilize the group and fund new games--including Xbox console exclusives.

In a recent interview with The Game Business, Xbox CSO Matthew Ball expounds on the idea of advertising in games--yet there was no mention of assets like King's adtech helping facilitate this new model.

"It's not about placing an ad in front of someone so we can sell pizza," Ball said.

"I think the best evidence comes from the streaming space where 100% of the net ads in the United States for years and years have been on the ad-supported tier. That has not excluded anyone from ad-free experiences, those products are still there, they're still popular, and people dip in and out."

Microsoft is also planning to release a new cloud-ready controller that's dedicated for streaming play on TVs and other internet-connected devices. This controller was believed to be codenamed Sebile and has morphed into a smaller-scale, pocket-friendly controller.

Introducing a free ad-supported tier could widen the gap between subscriptions and lead to more carve outs, as we've seen from streaming services, however Microsoft could learn from these trends over time.

"The question is not 'can we cram ads in everything,' the question is 'are there opportunities for us to find cheaper products, different products, different delivery models, that allow people who can't afford or wouldn't try or wouldn't test, to have an onboard to our properties and franchises.'

"I don't have anything to report on Microsoft's plans, I frankly haven't read into them despite my interest in the category.

"But it is coming from that category of how do we reach more people, how do we make our products more affordable, how do we make sure we can continue to fund outstanding work from our development teams. That's the goal."

Microsoft has yet to solidify its plans and is currently planning a major business reset that will lead to layoffs and potentially studio closures.