Microsoft is developing a platform that will allow certain brands to buy and advertise in Xbox games. The ads will only be shown in free games and will not interfere with the gameplay.
For example, in racing games, ads may appear as digital billboards located around the track, and video ads may appear in the lobby. The option will reportedly launch in the third quarter of 2022. It will be only available to select brands.
Microsoft doesn't want to annoy Xbox users. Currently, they don't see much ads on consoles. The company is taking careful steps in free-to-play game monetization by creating a 'private marketplace' where select brands will be allowed to serve ads in Xbox games.
As of now, ads on Xbox are pretty limited. The can appear in a few places, like in Xbox Dashboard. Also, in-game ads exist in a few games and come from very small number of ad networks.
According to Business Insider, Microsoft is creating an advertising platform to provide an additional earning option for developers of free games.
Advertising revenue will be shared between the game developer and Microsoft. So, the company doesn't seem to intend to use data from Bing and its other services to deliver targeted ads on Xbox.
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