Internal emails from the FTC v. Microsoft case reveal that Microsoft had ambitious plans to bring PC games to its cloud gaming platform, which until now, has been exclusively available for Xbox titles.

CEO Satya Nadella’s Curiosity

After hearing rumors of Google potentially rebranding its Stadia platform for third-party developers, Microsoft CEO Satya Nadella reached out to a few key individuals within the company for clarity on Microsoft’s direction:

  • Nadella asked: “Seems like [Google] will have a leg up because their stuff is more generic Linux VMs + Network…. But I am assuming we will do the same for Game Pass PC – right?”
  • Phil Spencer, the Xbox chief, responded: Indicating Microsoft’s plan on leveraging the Azure platform for streaming PC games, he emphasized how Microsoft could recoup costs through multiple re-use scenarios similar to Google’s white-label approach.
  • Kareem Choudhry, head of cloud gaming, added: “Phil is correct. Sarah [Bond] and I in partnership with Jason’s [Zander] team are driving a suitable Azure SKU… as part of a series that will serve the customer demand we see externally for IAAS and to run our xCloud PC streaming stack.” From these discussions, it was clear that as of July 2021, Microsoft was invested in expanding Xbox Cloud Gaming beyond Xbox titles.

Xbox Cloud Gaming’s Evolution

Despite the robust internal dialogues, progress on Xbox Cloud Gaming seemed to slow over the last year:

  • Microsoft had originally pledged to support existing game libraries on Xbox Cloud Gaming by the end of 2022, but this promise was unfulfilled.
  • A proposed dedicated subscription version of Xbox Cloud Gaming was scrapped.

However, recent developments have hinted at a pivot:

  • Microsoft inked a 10-year agreement with British mobile network EE to offer Xbox PC games to their users. Although EE does not have a current streaming solution, it raises questions about Microsoft’s progress with the Azure service.
  • Tests have been conducted for mouse and keyboard support on Xbox Cloud Gaming, but these have been limited to Xbox console games up to now.

Market Competition and Insights

Back in July 2021, Phil Spencer shared insights on the competitive landscape:

Spencer speculated on Google’s strategy with Stadia, hinting that they might focus more on cloud services and reduce emphasis on consumer services. Nvidia’s GeForce Now was recognized as the primary competitor. Google’s Stadia and Amazon’s Luna were also on Microsoft’s radar, but Stadia’s announcement to cease operations in January 2023 confirmed some of Spencer’s suspicions.

The Gaming Ecosystem Landscape

While Xbox Game Pass’s streaming capabilities have impressed many, its application was limited to Xbox console games. This was because the underlying technology for Xbox Cloud Gaming was built upon a specialized version of the Xbox Series X console chips, optimized for a uniform console experience. Running PC games, designed for standard desktops with individual graphics cards, would require significant adjustments.

However, the desire to include PC games was evident. Court documents revealed by the US Federal Trade Commission during Microsoft’s attempt to acquire Activision Blizzard provided further insights:

  • Nadella was keen to adapt Microsoft’s Game Pass PC in a manner similar to Google’s approach with Stadia.
  • The challenge lay in transitioning from a system built on customized Xbox hardware to one that could seamlessly handle PC games, akin to Nvidia’s GeForce Now or Google’s Stadia.

The Future of Cloud Gaming

The gaming industry has been rapidly evolving, with cloud gaming becoming a critical facet of this transformation. The ability to stream high-quality games directly from the cloud to users’ devices, eliminating the need for powerful local hardware, has been a game-changer, literally.

What Lies Ahead?

Two years post these internal discussions, the outcome remains uncertain. Microsoft continues to focus on traditional games, both locally played and streamed Xbox titles. For instance, the highly-anticipated RPG Starfield by Microsoft-owned Bethesda is available both locally on PC and Xbox, with the console version streaming to Game Pass subscribers.

As the gaming landscape evolves, expanding to stream PC-only games seems a logical progression for Microsoft’s “everything, everywhere” Game Pass strategy.

For a deeper dive into cloud gaming platforms and their potential, visit Cloud Gaming Insights.

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