As competition in the cloud gaming sector continues to heat up, Microsoft is taking a more aggressive, although well-planned, approach to testing and rolling out its own Project xCloud game streaming preview. The X019 announcements underline Microsoft’s core strengths in infrastructure, service delivery and content.
The latest news comes at a time when Google is preparing the commercial launch of its Stadia proposition. Stadia has been criticised in the run up to launch due to the limited number of games supported on the platform and the staggered rollout of some significant platform features.
Microsoft adds 50 new games from 25 different publishers to the Project xCloud preview
In stark contrast to Google’s Stadia offer, Microsoft has announced the addition of 50 more games to the Project xCloud Preview, which will be available for free to beta users of the service. While a lot of these games are first party, 25 third-party publishers and developers are releasing their games on the platform including Bandai Namco, Capcom, EA, Sega, Square Enix, Take-Two, Wargaming, Pearl Abyss, Codemasters, Klei Entertainment, and 505 Games. This marks a dramatic uptick in available content and reflects Microsoft’s long held relationships in the games space which have taken many years to establish.
New territories supported: India provides most interesting test scenario
Project xCloud’s public beta has been live to thousands of users in the US, UK and South Korea over the past four weeks. This is now being expanded to additional territories in early 2020 – Canada, Japan, Western Europe, and perhaps most interestingly, India.
India has emerged as an Android mobile-first market and one where games consoles and gaming PCs are under penetrated. It is also a market where Microsoft has strong Azure cloud data center coverage. Testing the appetite for Xbox games in India will provide valuable information on the potential for bringing AAA games to new audiences. The challenge remains one of monetisation. While the mobile gaming audience has grown significantly in recent years and months, monetising the gaming audience remains difficult.
New devices and platforms are on the roadmap
Microsoft has confirmed that Project xCloud will come to Windows 10 PCs in 2020 as it expands its support beyond Android devices. It is also working with other CE companies to broaden support for the service across device categories. Microsoft’s ambition is to bring Project xCloud content to the TV screen. I think it will be a matter of time before we see streaming supported on Xbox consoles, the same way as Sony does with PS4.
Putting Xbox Game Pass in the cloud is only ONE way that Microsoft is looking at monetising cloud gaming
The idea that Microsoft would put its Xbox Game Pass subscription service in the cloud has been an open secret for a number of months. Microsoft confirmed that ambition as part of its X019 announcements, although it is not confirmed how much a streaming option would add to the price of a Game Pass subscription.
However, while Game Pass will spearhead the company’s cloud gaming ambitions, Microsoft is also clearly open to other approaches to content monetisation in the cloud gaming space. This includes premium sales of individually streamed games, in-game monetisation, advertising, use of demos or even perhaps a separate streaming-only subscription offer.
Microsoft continues to aggressively pursue its Xbox Game Pass strategy as it lays the foundation for a platform – Xbox Live – and service – Xbox Game Pass - which it can hinge off onto other screens and devices using cloud gaming technology. Subscribers to Xbox Game Pass have more than doubled in the last 12 months. At X019, Microsoft confirmed over 50 new games for Game Pass and continued its aggressive user acquisition strategy with its Xbox Game Pass Ultimate (Xbox Game Pass for Console and PC alongside Xbox Live Gold) promotion offering 3 months of the service for $1.
Question marks remain over scalability of game streaming and additional cost to third-parties
While cloud gaming is arguably more commercially viable than ever, the cost of infrastructure and ongoing service delivery (to the service provider, publisher and even consumer with regards to data usage) means that challenges remain to this becoming a mainstream form of distribution in the short or medium term. Microsoft believes the additional costs of service delivery are not insurmountable, but with no major cost advantages from scaling the userbase as all players need to have access to a GPU instance, the discussion around commercial viability of this distribution technology will continue.