Microsoft is reportedly looking to sell ad space in free-to-play Xbox titles. The tech giant is seeking help from ad tech and ad agencies to help developers sell more ad real estate in games. The changes may come into go into effect as early as Q3 2022.  Microsoft is looking to push the medium harder in its free-to-play games, in order to subsidize the current microtransaction funding model and make Xbox a more attractive proposition for prospective game makers.

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 per 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.

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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.

Mobile game ads can be a win for everyone

Because not all users are willing or able to pay for mobile games or in-app purchase items, advertising has become the most popular way of monetizing apps. Mobile app advertising is a win for everyone: developers, users, and advertisers. Developers can earn the revenue they need to keep producing content they’re passionate about. Users get to continue playing the games they love for free, which increases engagement and retention. And advertisers have the opportunity to acquire new users with targeted and relevant ads.

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Mobile game advertising can be combined with other monetization models

In addition to providing a free user experience, in-app advertising is a highly flexible model that goes hand-in-hand with other revenue streams, such as IAP. An increasing number of developers are finding that ads can co-exist with IAP without cannibalizing revenue. Developers are also discovering that rewarded ads can even give users a preview of in-app items available for purchase, sometimes converting more non-paying users into spenders.

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