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It's thought the companies will start off offering ad placement in free-to-play titles.
Sony and Microsoft are both devising programs that would see ads appear in PlayStation and Xbox games, according to a report.
According to sources speaking with BusinessInsider, Sony is currently testing with adtech partners to help developers insert ads in free-to-play games as a way for studios to monetize titles.
Currently, the ads are limited to in-menu, and Sony intends to put the plan into place by the end of 2022. The ads would eventually be inserted into PlayStation games, but they would appear as part of the game, similar to a digital billboard. The report goes on to state that players who watch ads could be rewarded with in-game items such as skins.
Microsoft's plan would see advertisers place ads inside free-to-play games as well. The firm is currently looking into various adtech companies and ad agencies to help with the process, said sources speaking with BusinessInsider.
The company seems adamant though that the ads be subtle and akin to dynamically rendered billboards so as not to impede gameplay. It also doesn't want customer data to be used by other companies.
Microsoft is looking for ads to go live by the third quarter.
Sony didn't issue a comment when BusinessInsider reached out, and Microsoft would not share its current plans.