In-game advertising is ramping up, but consumers are worried

The trend: Advertisements could be coming to PC and console games in the near future. Last week, Insider revealed that Microsoft was seeking adtech partners and building its own systems to bring ads to free-to-play Xbox games. One day later, Bloomberg revealed that Sony had been working on a similar program for at least 18 months.

More on this: Bringing ads to free-to-play console games makes sense on paper. Advertisements have driven record revenues for mobile games, and the global audience for video games as a whole is only getting bigger.

• According to a March survey from Deloitte, 96% of millennials, 96% of Gen Zers, and 89% of Gen Xers listed video games as one of their top 3 frequent activities.
• It’s not just in-game ads that are getting attention. Japanese publisher Sega is reportedly working on a large-scale remake of Crazy Taxi, one of the first video games to heavily feature in-game advertising—but now gaming consoles are connected to the internet, which means that in-game ad space becomes more flexible and valuable.
• This isn’t even Microsoft’s first foray into in-game ads. Microsoft acquired gaming adtech company Massive Inc. in 2006 (though it shut down in 2010) to bring ads to several games on Xbox consoles. And plenty of contemporary games across genres feature advertising in one way or another.

The challenge: But while advertising interest is growing within the industry, consumers haven’t reacted so positively. Games have a long history with advertising from their inception, but the re-injection of ads into free-to-play games should be handled with care or risk alienating consumers.

• A Reddit thread on popular forum r/Games with over 3,500 upvotes was full of negative responses to the news. “Billboard ads in-game is one thing, but having ads interrupt in the middle of the game would drive me insane,” said one commenter. Popular gaming news site Kotaku’s coverage of the news begins, “Raise your hand if you’re excited to see more ads inside your favorite video games? I don’t see any hands. Well, bad news.”
• Some of consumers’ anxiety comes from concerns about how these ads will take form. Xbox’s rumored proposals include in-game billboards in racing or open-world games that could be updated with new advertisements, but questions about whether players would be served ads between game matches or have ads obscure the screen mid-match have consumers worried.

The big takeaway: From licensed games dating back to the ‘80s to Fortnite’s lavish in-game concerts, advertising has been part of the gaming experience since the medium’s birth. But ads still aren’t baked into the medium the way they are for TV, and advertisers should be mindful of players’ wishes for a non-disruptive experience.