Microsoft reportedly wants to bring ads to free-to-play Xbox games

According to a report by Insider, Microsoft is reportedly working on a program that will allow brands to show ads in free-to-play Xbox games. Sources familiar with the situation told Insider that the ads would not disrupt gameplay and could appear on billboards in racing games, for example.

It's not immediately clear how Microsoft plans to implement the ads, such as showing them as avatar skins or as videos inside game lobbies. But as Insider notes, Microsoft is reportedly concerned that the ads may "annoy" players, and is planning to create a "private marketplace" to allow only select brands into the program.

Sources also told Insider that Microsoft does not intend to cut advertising revenue, and will instead allow the game developer and advertising company to share the funds. It's possible that Microsoft may want to use this as a way to attract more developers of free-to-play games to the platform, as it will open up another flow of revenue outside of microtransactions.

According to the insider, Microsoft will not use data collected from Bing and other services for targeted ads on Xbox. The outlet also doesn't know whether Microsoft has given the idea to advertisers yet, but its sources claim that ads will start showing on Xbox in the third quarter of this year.

"We're always looking for ways to improve the experience for players and developers alike, but we don't have much else to share," a Microsoft spokesperson said in a statement to Insider. Microsoft did not immediately respond to The Verge's request for comment.

In-game ads on console games are not a new concept - game companies experimented with them in paid games in the mid-2000s. Around this time, EA Games partnered with Microsoft-owned advertising company Massive, allowing companies to advertise in Madden NFL, Skate, NHL and NASCAR franchises as well as Burnout Paradise. If you played any of these games at the time, you might remember that old Obama ads were pasted on digital playgrounds or billboards. There were also real-life commercials on billboards in Saints Row 2, such as those for Netflix.

In-game ads for real-life products may be a novelty back in the day, but with some next-gen games priced closer to $70, players expect an ad-free experience — which is why Microsoft is reportedly But launching the initiative is the only free-to-play game. Most recently, EA attempted to move a non-skippable, full-screen ad to UFC 4 in 2020. Fans who paid for the $60 game were apparently not happy, which resulted in EA pulling the ad.