Microsoft is reportedly working on a program that will let brands showcase advertisements within free-to-play Xbox games, according to a report from Insider. Sources familiar with the situation told Insider that the ads wouldn’t disrupt gameplay and may appear on a billboard in a racing game, for example.
It’s not immediately clear how else Microsoft plans on implementing ads, such as having them show up as avatar skins or as videos inside game lobbies. But as Insider notes, Microsoft is reportedly concerned that the ads could “irritate” players and is planning on building a “private marketplace” to let only select brands into the program.
Microsoft reportedly doesn’t intend to take a cut of the ad revenue
Sources also told Insider that Microsoft doesn’t intend to take a cut of ad revenue and will instead allow the game developer and advertising company to share the funds. It’s possible that Microsoft may just want to use this as a way to attract more developers of free-to-play games to the platform, as this would open up another stream of revenue outside of microtransactions.
According to Insider, Microsoft won’t use the data it collects from Bing and other services for targeted ads on Xbox. The outlet also doesn’t know whether Microsoft has floated the idea to advertisers yet, but its sources claim ads will start appearing on Xbox as soon 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 companies experimented with them in paid games quite a bit in the mid-to-late 2000s. Around this time, EA Games partnered with the (now-defunct) Microsoft-owned advertising company Massive, letting companies place ads in Madden NFL, Skate, NHL, and NASCAR franchises, as well as in Burnout Paradise. If you played any of these games at the time, you might remember seeing digital Obama ads plastered in digital sporting arenas or on billboards. Saints Row 2 even had real-life ads on billboards, like this one for Netflix.
In-game ads for real-life products might have been a novelty back in the day, but with some next-gen games costing close to $70, players expect an ad-free experience. This is likely the reason why Microsoft is reportedly rolling out the initiative for free-to-play games only. More recently, EA attempted to slip an unskippable, full-screen commercial into UFC 4 in 2020. Fans who paid for the $60 game obviously weren’t happy, resulting in EA pulling the ad.
Update April 16th 1:45PM ET: Updated to add that Microsoft didn’t have any additional information to share with The Verge.