Cloud Gaming is the Future of Xbox

Phil Spencer recently spoke about the future of gaming at Microsoft at Barclays Global Technology, Media and Telecommunications Conference. One point of focus is how they’re setting the foundation for the future of their gaming division.

You’ve seen the studio — you watched the studio acquisitions we’ve done. We’re focused on teams, we’re focused on creative teams that we think can build very interesting content to help the flywheel Game Pass grow and our platforms grow. We’re probably less interested in management teams and infrastructure and things that we already have inside of our organization. And you can just look at the track record, we’ve added seven studios in six months.

It’s quite clear from that passage that Microsoft is dedicated to the future of their gaming division. Gamepass in my experience has been a great deal for me – especially for new games that you’re not 100% sure of. For example, Sea of Thieves was available on day one on the Game Pass. It looked like a fun game but wasn’t something that hooked me and if I had paid full price for it, I would have certainly regretted the decision. To add to that, I was able to play Sea of Thieves on both my Xbox and PC with that $10/month subscription!

Project XCloud signifies a fundamental change in how Microsoft views their gaming division. We’ve already seen Microsoft releasing more of their first party games on PC instead of retaining them as an Xbox exclusive and this is just the beginning of this changing landscape.

So, our transition over the last few years has been very much from a per device on the PC gamer, on the console game, on the mobile gamer to I’m just somebody who likes to play games across any device. The video we showed there of Project xCloud is us really looking at the body of content that we have on our platforms today, and how do we bring that content to any device that somebody is looking at. We focus first on an Android phone, because there are 1 billion Android phones on the planet,

With their business software, we’ve certainly seen a strong focus on developing mobile apps, despite the fact that Windows Phone is essentially dead. The mobile version of Excel and OneNote, for instance are becoming quite powerful, not on par with their desktop counterparts but definitely closing the gap. We’ve also seen the strong push toward services for Microsoft products. Combining these two trends, Project XCloud is the natural next step for the Xbox brand as Microsoft continues to move toward expanding their subscription services. This is where the future of Xbox gets quite exciting as it expands from the core hardware that has defined the Xbox brand for the last three generations.

So, for us, it’s all about how we reach 2 billion gamers. If you build the market around a couple hundred million people that are going to own a game console or high-end gaming PC, then your business model diversity can actually narrow because your customers are narrow. But, when you think about reaching a customer with this content where their only compute device could be an Android phone, you think about what are all the ways that that person pays for content, if they do at all today.

The future of Xbox is certainly going to be interesting. Xbox Play Anywhere and Gamepass covering PC too are some of the early changes of the new Xbox strategy and I’m certainly looking forward to checking out their cloud gaming service. What are your thoughts on Phil Spencer’s comments?

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