Programmatic ads could be all three, product placements, more typical billboards or pre/mid-roll interstitials.
The difference between the first two is very little really, it's just the form of the asset aka a 2d design vs a 3d one.
I suspect most if not all implementation will be the first two, product placements and billboards.
eSport Boxing Club is probably a good example to look at.
Also I think that both Microsoft and Sony are probably prepping for more 'metaverse' like experiences.
A very optimistic way to look at it; problem is the same rumor is already talking about Youtube-style loading screen ads or "break ads" in the games as well; there's no logical reason IMO to assume the product placement & billboard style will be dominant considering they require more work from all parties than the third, and if there's one thing about this industry (or most industries), it's that they want to take the path of least resistance to get the most gain.
Broader options for gamers who want online play but don't want to pay a fee. Just like how the XSS provides gamers on a budget with additional options to enter this generation. Options are good.
Nothing about these rumors point to Microsoft or Sony using these ads to get rid of paying for online. Especially since, if this is mainly for F2P games as everyone keeps saying, what sense would it make when F2P games are ALREADY actually F2P on consoles (you don't need PS+ or XBL Gold to play them online)?
Billboard ads and an extra splash screen I can live with.
Unskippable 30-60s ads akin to watching YouTube when not logged in and on a pc without Adblock are a step too far
Too bad that step going too far is probably what's going to happen, going by past examples with other things (DLC, MTX, lootboxes).
Sony and Microsoft make game consoles. On those consoles sub services cost money. Ads could potentially make those services free. If so I'd support ads in games for players who do not or can not pay for those services. It's not super complicated. I believe Netflix is planning on adding ads and lowering costs for customers who are interested.
Like GHG said, there's very little chance that these ad programs will get rid of paid online. At least, not unless they become an absolutely massive revenue stream to where Microsoft & Sony can afford to sacrifice paid online and still get a net revenue increase (which would also contradict part of the rumor saying that at least Microsoft are not considering taking a cut from these ads..which I find extremely hard to believe).
More likely, the ads will be an additional revenue stream for the platform holders in addition to everything else they already have, because that's what they companies want to do: maximize revenue & profit. Bringing up Netflix is actually not the best example, either, considering their stock cratering (which might bring into question the sustainability of streaming and subscription services in general) and them wanting to do an ad-based tier is part of the reason for their big subscriber loss (and will probably cause more subscribers to drop).
Personally I think it's very difficult to introduce ad-based options after the fact: you either have them there at the start or you just have to give up that type of model because the likely backlash against adding ad-based models to an existing subscription model or platform revenue model does more harm than good.
This isn't a 'me too' or a 'leak'...its been known for years...
Who was talking about this in 2016?