While expensive hardware devices and PC rigs appear to be holding strong in the video game market space, companies like Microsoft, makers of the Xbox platform, are moving full-steam ahead to bring gaming into the world of streaming.
"We love our console business and we've already announced our next generation console," Kareem Choudhry, corporate vice president of gaming cloud at Microsoft, told Cheddar's Hope King on Wednesday. "We see the move to a streaming world as an additive to everything that we're doing on console and PC and not replace-ative."
With Project xCloud, Microsoft throws its hat in the ring against the upcoming Google Stadia and the already-existing PlayStation Now service, allowing games to stream from hardware located in the cloud network, rather than relying on expensive devices in the home. Not unlike the advent of streaming movies, the change could be big for expanding the base of gaming consumers.
"We're going to enable an additional way for your players to engage with your content, which they get excited about, and then eventually we're going to create a motion, where people who, for whatever reason, choose not to have a console or don't have a gaming PC, to get access to that content as well," Choudhry said about what the growth of cloud gaming could mean for people accessing the games made by Microsoft's partners.
Distribution of video games has greatly changed over the years, as Wedbush analyst Michael Pachter discussed with Cheddar after the Electronics Entertainment Expo (E3), where Microsoft showed off its future cloud ambitions. The progression from stores to digital downloads has now moved beyond that, towards playing games without buying consoles or disks.
"Streaming is the future of gaming the same way that retail was the future of gaming in the 1970s," Pachter said. "It's a game changer for the consumer who wants to play games, but not badly enough to purchase a console or high-end PC, and there's a lot of them."
Pachter roughly estimates there are probably about 500 million people beyond the existing console and PC install base who would be interested in playing games casually and might be reached by the newer distribution model. And that means a very competitive space to gain those future consumers.
"Well, there are a lot of companies that are entering into the space. When we think about our own position, we really believe to have success in gaming at a global scale, we think that the three C's are what's important: content, community, and cloud," said Choudhry regarding the challenges xCloud faces
The Microsoft exec proudly touted the amount of content being produced by partners and development studios that have been acquired by Xbox, the millions-strong community already subscribed to the Xbox Live online service, and the established cloud infrastructure, Microsoft's Azure.
Choudhry says Azure is an important tool in reducing latency, the potential delay between games streaming to a user even as the user tries to enter commands with a controller.
"The biggest thing to combat latency would be to deploy hardware as close to users as possible and that's where I get really excited, that Azure's in 54 regions around the world," he noted, touting Microsoft's advantage.
The head of Microsoft's cloud gaming still won't throw out the current console generation with the cloud bathwater, reassuring the current and legacy users that the future still includes a brand new console already announced at E3 in June.
"When you think of our gaming journey to the cloud it really started with the original Xbox when we put an ethernet port on the back of that first console," Choudhry said. "So, I kind of see it more as a natural evolution than some radical new shift."
For Michael Pachter, the evolution of gaming put succinctly is: "The guy who wins is the guy who has content."
