Microsoft has made some notable strides with Xbox over the past few years. Its Xbox Game Pass streaming service in particular has been a hit since its launch in 2017 and has prompted other gaming companies to replicate the same model in some form. But now another Microsoft service appears to be pushing other industry players to move in a similar direction. While Xbox's cloud gaming might not draw the numbers like Game Pass, the service has seen an active push from the tech giant recently. It's an indication that Microsoft is likely placing its bets on streaming and the industry appears to have taken notice.
The company first teased xCloud back during E3 2018 before showcasing the service in action a year later by running Forza Horizon 4 on a phone connected to a wireless Xbox controller. The service went on beta in the same year and was eventually included as a free add-on to Xbox Game Pass Ultimate subscribers. While cloud gaming continues to be a niche area, part of the appeal of Microsoft's service is its widespread availability to a plethora of devices and platforms. So far, it supports PC, Xbox consoles, Android, iOS, and Sony's DualShock controllers. By October 2022, Xbox Game Pass cloud gaming was announced for the Meta Quest 2.
The Stadia Effect
Of course, Microsoft wasn't the only player in the cloud gaming space during this time. Google also entered the fray with Stadia in 2019. It was a service geared towards offering 4K 60fps gaming to those without a console or a PC. While its library was left wanting, initially it still won the favor of numerous early adopters, but marketing the service proved to be tricky for Google since hardcore gamers already had widely available platforms. In contrast, Stadia didn’t appeal to many casual gamers considering cloud gaming was still a niche within the industry itself. So, thanks to a stagnating product, Stadia shut down in January 2023, barely three years since its launch.
That’s not to say Stadia didn’t have any impact in the cloud gaming space. Over the course of Google’s attempts at capturing the market, more attention started drawing towards cloud gaming, and the likes of Microsoft’s xCloud looked to capitalize on the opportunity. In turn, this prompted others to seemingly follow suit. Most notably, Sony, a company that’s primarily known for its console hardware in the gaming industry, appears to be actively investing in the space. In December, Sony patented a pass-through cloud gaming device that’s compatible with Apple TV, Chromecast, and Amazon Fire Stick. Though the device is likely months or years away from becoming publicly available, it marks an interesting focus area for the company.
Cloud Competition from Sony and More
Along with the pass-through device, Sony also filed a patent for a browser-based cloud gaming feature in the same year. Interestingly, this isn’t the first time the PlayStation maker has delved into cloud gaming. Sony previously discontinued its PlayStation Now game streaming service after the company overhauled its offering to PlayStation Plus. Here, gamers had the option to stream previous-gen PS titles via the PS Plus Premium tier. A more recent rumor suggests that Sony may enable players to stream PS5 games in an upcoming update on the PS5. Sony itself hasn’t claimed anything officially yet, though the company’s recent trajectory hints that it’s likely taking this route.
Other tech giants are also taking a keen interest in cloud gaming. Back in 2021, Netflix announced that was expanding into video games, and over the next few years, the streaming company proceeded to acquire a number of studios while growing its own development capabilities. As of now, its game library hosts over 50 titles with more on the way, including a few Netflix exclusives from Ubisoft. However, this was only part of the company’s strategy as Netflix was also looking at building its own cloud gaming arm.
The Growing Appeal of Cloud Gaming
By August 2022, Netflix started moving towards cloud gaming services recruiting several key roles for its Cloud Games division which it continues to do so even today. More importantly, the company is seemingly looking to emulate its success with the existing network backend such as Netflix’s real-time data infrastructure and stream processing mechanisms. It will be interesting to see if Netflix finds success, given that it already has over 230 million subscribers across 190 countries.
Time will tell if these cloud gaming investments reap any returns, but current market economics suggests that gamers may find the idea of streaming games more appealing. For instance, high-profile games have already begun to get more expensive, with some upcoming titles like The Legend of Zelda: Tears of the Kingdom priced at $70. This means that subscription services like Game Pass would come off as a bargain considering players get access to hundreds of titles at a much lower price point. Additionally, Microsoft including xCloud as a free add-on is bound to attract the attention of many gamers not looking to splurge on a gaming console.
Microsoft's Regulatory Concerns
However, Microsoft’s seemingly growing influence in cloud gaming hasn’t gone unnoticed by regulators. Recently, the UK’s Competition and Markets Authority (CMA) expressed its concerns over Microsoft’s $68.7 billion Activision Blizzard deal, specifically with regard to game exclusivity and cloud gaming. The CMA claims that if the acquisition goes through, it would only reinforce the Xbox maker’s strong position in cloud gaming, and it could potentially hold control of 60-70 percent of the cloud gaming market.
The fact that regulators are already expressing concerns over Microsoft’s potential dominance in the cloud gaming space is an indication that game streaming will likely play a bigger part within the industry in the future. As Microsoft pushes ahead with its cloud gaming ambitions, other industry players will continue to follow in hopes of getting ahead of the tech giant. That’s not to say the market isn’t without its problems, particularly after the Stadia shutdown and Amazon laying off its Luna division. Even so, Microsoft’s cloud gaming efforts and its ongoing influence within the gaming sector are worth noting. It will be interesting to see how the future pans out for Xbox and its growing competition in cloud gaming.