According to Insider, Microsoft is working on a programme that will allow brands to showcase advertisements within free-to-play Xbox games. According to sources familiar with the situation, the ads would not interfere with gameplay and could appear on a billboard in a racing game, for example.
It's unclear how else Microsoft intends to implement ads, such as having them appear as avatar skins or as videos inside game lobbies. However, as reported by Insider, Microsoft is concerned that the ads will "irritate" players and plans to build a "private marketplace" to allow only select brands into the programme.
According to Insider, Microsoft does not intend to take a cut of ad revenue, instead allowing the game developer and advertising company to split the funds. It's possible that Microsoft simply wants to use this as a way to attract more free-to-play game developers to the platform, as this would open up a new revenue stream aside from microtransactions.
According to Insider, Microsoft will not use data gathered from Bing and other services to target advertisements on Xbox. The outlet also does not know whether Microsoft has yet approached advertisers about the idea, but its sources claim ads will begin appearing on Xbox as early as the third quarter of this year.
“We are always looking for ways to improve the experience for players and developers but we don’t have anything further to share,” a Microsoft spokesperson said in a statement to Insider. The Verge reached out to Microsoft with a request for comment, but the company said it didn’t have any additional information to share beyond its statement to Insider.
In-game advertisements on console games aren't a new concept; game developers experimented with them extensively in paid games in the mid to late 2000s. Around this time, EA Games partnered with the (now-defunct) Microsoft-owned advertising company Massive, allowing businesses to place advertisements in the Madden NFL, Skate, NHL, and NASCAR franchises, as well as Burnout Paradise. If you were playing any of these games at the time, you may recall seeing digital Obama advertisements plastered in digital sporting arenas or on billboards. Saints Row 2 even had real-life billboard advertisements, such as this one for Netflix.
In-game advertisements for real-world products may have been novel in the past, but with some next-gen games costing close to $70, players expect an ad-free experience — which is likely why Microsoft is reportedly limiting the initiative to free-to-play games only. More recently, in 2020, EA attempted to sneak an unskippable full-screen commercial into UFC 4. Fans who paid $60 for the game were clearly dissatisfied, so EA removed the advertisement.