Rectify Gaming

New Reports Reveals xCloud Was Intended For Mobile Players, Xbox Series X Sales Suffered For The Streaming Initiative

Posted on June 28, 2023 by Nick Moreno

Listen to this Article:

For many players on the Xbox side of things, it is now a commodity for Xbox Game Pass Ultimate members to instantly jump into the library of titles via mobile with Xbox Cloud Gaming. As the service is slowly integrating through more avenues, the Xbox firm continues to bolster its plans for the initiative. Previously, Microsoft formed a new publishing division solely for xCloud-developed titles.

Already, this has proven to be a new approach for Microsoft with Hideo Kojima confirmed to be attached with a new game in development. Additionally, the service has proven to be pulling traction with its users. It was reported more than 10 million players already use xCloud; which at the time was more than half its users. Even more is that user activity was up 1800% in 2022 as well.

However, it comes to be revealed that despite putting xCloud at the forefront for its users to play games no matter where, it was intended specifically to draw newcomers from the mobile gaming market. In a transcription by TweakTown of the FTC hearings recently, Xbox boss Phil Spencer elaborates on the intentions for Xbox Cloud Gaming.

We built xCloud knowing that on Xbox we have many games that run on our console. There are many users around the world that have phones that aren’t able to play those games, nor will they be. Our strategy was to put consoles in our data centers to stream those consoles to a mobile phone, so if someone wanted to play Halo on a mobile phone, they would have access to those games through streaming. My real hope was…at that point we had 20 years of games, that that would give users a unique offering to mobiles, and we would unlock the 1.8 billion people that play mobile phones today.

Elsewhere in a new document from the Microsoft as per the FTC, it reveals Microsoft’s intentions to wager on cloud streaming as Xbox Series consoles were constrained in production. Not only did Microsoft improve its servers intended for Xbox Series X then, but it also shares that the firm had greater intentions for xcloud with the resources available.

“Gaming makes sense for MS, imo, as the focus on consumer.[Redacted] I can see no other clear consumer category with this TAM where Microsoft has the product truth today and customer demand that we have in Gaming and where the disruption that is happening in the business plays to some of Microsoft’s long term strengths (cloud and subs), Spencer writes in the email.

“On the capital allocation that we are making in Gaming. I believe our investments in content and xcloud are critical. to realizing our potential in Gaming. Amazon Luna and Google Stadia do not have the console strength we have giving us developer engagement, gaming community and catalog of content.”

Spencer continues, “From a strategy perspective I believe in our tradeoffs for Cloud and Content in Gaming over console volume. I would obviously love to invest in all unconstrained but I completely support the tradeoffs we are making. With hardware timelines we can’t be as agile on supply when our revenue or AM targets exceed budgets as we are seeing in FY21 (even without Halo). We are making Q2 and Q3 decisions to airfreight consoles this FY which will pull some volume forward given how our P&L is tracking but this is more of a timing fix than a volume fix.”

“So while we talk about yield as our issue with Xbox Series SIX today, there is some small truth to that but in reality if our yield was on plan right now we’d feel the same constraints and customer sentiment. We could sell more consoles this year and next year, there is demand. […]  I realize there are a ton of decisions on spend, C19 impact on gaming release dates, XGP content investments etc. I believe in the tradeoffs we are making for our long term goals but there are near a mid-terms consumer engagement and console unit volume tradeoffs. I just wanted to ensure we were all aligned.”

What comes at the largest surprise is how Microsoft went against its word to consumers when reflecting on a previous statement. In that, Xbox Game Pass senior global product manager Pav Bhardwaj reassured that despite a larger emphasis on Xbox Cloud Gaming, it would not overshadow the general console market. You can read the full report by heading here.

Which surprises you most regarding this new report on Xbox Cloud Gaming?

Source: Federal Trade Commission

Share Everywhere!