Microsoft is reportedly working on a program that will allow brands to display ads within free-to-play Xbox games, according to an Insider report. Sources familiar with the situation told Insider that the ads would not break gameplay and could appear on a billboard in a racing game, for example.
It’s not immediately clear how else Microsoft plans to implement ads, such as having them appear as avatar skins or as videos within game lobbies. But as Insider points out, Microsoft is concerned that the ads could “irritate” gamers and plans to build a “private marketplace” to allow only select brands in the show.
Sources also told Insider that Microsoft does not intend to take a cut of ad revenue and will instead allow the game’s developer and ad company to share the funds. Microsoft may just want to use this as a way to attract more free game developers to the platform, as this would open up another revenue stream outside of microtransactions.
According to Insider, Microsoft will not use the data it collects from Bing and other services for targeted ads on Xbox. The outlet also doesn’t know if Microsoft has pitched the idea to advertisers, but its sources say ads will start appearing on Xbox starting in the third quarter of this year.
“We’re always looking for ways to improve the player and developer experience, but we have nothing else 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 ads in console games are not a new concept; game companies experimented quite a bit with them in paid games in the mid-to-late 2000s. Around this time, EA Games partnered with the (now defunct) Microsoft-owned advertising company Massive, which allowed companies place ads in the Madden NFL, Skate, NHL, and NASCAR franchises, as well as Burnout Paradise. If you played any of these games at the time, you may remember seeing Obama digital ads plastered on digital sports arenas or billboards. Saints Row 2 even had real-life billboard ads, like this one from Netflix.
In-game ads for real-life products might have been a novelty in the past, but with some next-gen games costing close to $70, players expect an ad-free experience. This is probably why Microsoft is reportedly implementing the initiative for free games only. More recently, EA attempted to place an unskippable full-screen commercial in UFC 4 in 2020. Fans who paid for the $60 game were obviously unhappy, resulting in EA pulling the ad.