Opinion: Xbox and PlayStation could follow NVIDIA's lead with gaming ads

Costs are rising and platform-holders are scrambling to find new ways to monetize users. On-screen advertisements may present one such opportunity to the console market.

2

Advertisements may be coming to the dedicated gaming environment in some shape or form. Experts have speculated that subscription services like Xbox Game Pass and PlayStation Plus could get lower-cost ad-supported tiers, not unlike Netflix, with users being able to watch an on-screen ad in exchange for playtime.

Xbox President Sarah Bond has also discussed something similar in public interviews, suggesting that Xbox would offer "slices of gameplay" to users. In December, Xbox chief financial officer Tim Stuart also suggested ads could come to xCloud game streaming.

Reports also indicate that Sony is working on some sort of ad-tech platform that would show in-game advertisements to players, who would then be rewarded with in-game items. There's further reports that Microsoft has been mulling over putting ads into free-to-play games, and leaked internal documents from the FTC v Microsoft trial suggest that ads could come to Xbox gaming.

There's been no implementation from Microsoft (or Sony) so far, but that could change. NVIDIA may have shown them the way.

NVIDIA recently announced it's adding advertisements to the free GeForce Now tier. Free users will now be shown ads while they're waiting in a streaming queue:

"The GeForce NOW free membership provides unparalleled gaming value by allowing users to game on a GeForce PC at no cost. To help provide ongoing support for the free service, starting March 5, 2024, members will experience up to two minutes of video sponsorship messages before each free gaming session while in queue.

"We anticipate that this change will reduce average wait times for free users over time."

Who else has game streaming services? Sony and Microsoft, of course. Something like this could show up in Xbox Game Pass and/or PlayStation Plus, but how exactly this will manifest remains unclear.

Remember that cloud gaming is very costly, and for Microsoft at least, it's not profitable.

Watching a quick ad during a queue sounds innocuous enough, but what if the queues were artificially inflated to ensure gamers spend a requisite amount of time on an ad?

Or, perhaps, the ads themselves would just be 30, 60, or even 90 seconds by default. The move may have push-back from consumers, but at the same time, this could be a low-cost or even free entry point into the ecosystem; it all just depends on how much money that could potentially be lost with this kind of model--e.g. is it worth doing, are ad revenues higher than costs, is it profitable, etc.