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Microsoft leaps into game streaming across devices with Project xCloud

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Project xCloud: Gaming with you at the center

Back at E3 2018 in June, Microsoft announced that it had teams working to bring Xbox games to even more devices with the help of streaming technology, and we now have a clearer picture of what that will look like. Project xCloud is bringing game streaming to Xbox, PC, and mobile devices beginning in 2019, and it aims to make it easier than ever for developers to get on board.

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Using the Azure cloud, which Microsoft has also used to power portions of Xbox One and PC games in the past, Project xCloud will allow players across several different devices to experience the games currently only available to Xbox One and PC through streaming. On mobile devices like phones and tablets, players can use a Bluetooth-connected Xbox wireless controller, or they can even use touch controls to play on the go.

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“We are developing a new game-specific touch input overlay that provides maximum response in a minimal footprint for players who choose to play without a controller,” Microsoft gaming cloud Corporate VP Kareem Choudhry said in the announcement … perhaps he should consider changing his name to Kareem “Cloudhry.”

Project xCloud Blade Animation

In order to run the games over the cloud, Microsoft is installing hardware in its data centers, with the first already online in Quincy, Washington. The hardware is made by taking the components of Xbox One consoles and turning them into a blade unit, which can then host multiple Xbox games at once. It’s currently running at 10Mbps, but this could be lowered further later to reduce latency.

In the announcement video, which you can watch at the top of the page, we see Forza Horizon 4 being played live on an Android phone, and it’s tough to distinguish it from the traditional version. A Halo game and Sea of Thieves are also briefly shown, with touch controls being used to control the characters.

Microsoft stressed that this isn’t designed to replace the traditional console experience, but to offer an alternative for those looking for more options. This seems to be in line with rumors we’ve heard about the next Xbox console. Rather than be one device, Microsoft will reportedly be offering two. The first will be a traditional console similar to the Xbox One, while the second will be a low-cost, streaming-only system that will presumably make use of Project xCloud.

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Gabe Gurwin
Gabe Gurwin
Former Digital Trends Contributor
Gabe Gurwin has been playing games since 1997, beginning with the N64 and the Super Nintendo. He began his journalism career…
Why cloud gaming is the linchpin in Microsoft’s troubled Activision Blizzard acqusition
Key art showing multiple devices playing games via the cloud.

The United Kingdom’s Competition and Markets Authority (CMA) delivered a shocker this week when it blocked Microsoft’s acquisition of Activision Blizzard on Wednesday. While a lot of focus on Microsoft’s fight was centered around whether or not the acquisition would give Xbox consoles an unfair advantage over PlayStation consoles, what ultimately decided it was a much smaller market: cloud gaming.
The idea of being able to stream the game you’re playing from the cloud has existed for well over a decade. Cloud gaming’s relevance to the video game industry has only grown over the past several years thanks to both failed and successful efforts from big tech companies like Google, Amazon, and, most importantly, Microsoft. Still, cloud gaming is considered relatively niche, with Activision Blizzard Bobby Kotick calling it "inconsequential" in an interview with Bloomberg and UCL Associate Profession Joost Rietveld saying it’s not a distinct market in a submission to the CMA.
Despite those pleas, the CMA claims that cloud gaming is a “nascent market” and that “already strong incumbent in this market even stronger” in its 418-page report on the matter. Following the CMA’s decision on Wednesday, I spoke to several different analysts to find more clarity about how big Microsoft is in the cloud gaming space and why the CMA should feel compelled to intervene. While experts mostly side with Microsoft over the CMA on this decision, one greater truth emerged from these discussions. Whether one thinks cloud gaming is relevant to this acquisition or not, this emergent style of gaming has reached a point of no return where it'll be instrumental to the video game industry going forward. 
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Cloud gaming may sound like a niche within the industry, but that's not entirely accurate. BrandFinance Managing Director Laurence Newell tells Digital Trends that “cloud-based services account for over 70% of Microsoft’s brand value, amounting to a staggering $137.5 billion.” That’s quite an eye-catching number that understandably would raise a regulator's alarm bells. However, Newell admits that gaming only makes up 8.5% of Microsoft’s revenue, and cloud gaming is an even smaller amount of that slice.
Despite its relatively small impact on the wider company, most of the experts I spoke to agreed that Microsoft has emerged as a cloud gaming leader thanks to its compatibility with a large segment of the Xbox Game Pass Ultimate library. Conversely, Activision Blizzard has had almost no cloud gaming presence outside of one Sekiro: Shadows Die Twice port on Google Stadia before that service’s shutdown. If it were to be acquired, it is inevitable that more Activision Blizzard games would likely come to cloud-based gaming services.

Despite the shutdown of Google Stadia and the relatively small brand value received from cloud gaming compared to the rest of the company, the CMA still points out in the press release about its decision that “monthly active users in the U.K. more than tripled from the start of 2021 to the end of 2022. It is forecast to be worth up to 11 billion British pounds globally and 1 billion pounds in the U.K. by 2026.” Associate Professor of Strategy and Entrepreneurship at the UCL School of Management Joost Rietveld, who has also been a consultant for Microsoft during its acquisition process, challenges the notion that cloud gaming as a whole is a single market.
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“The CMA’s argument is not that acquiring Activision Blizzard would allow Microsoft to dominate the console market as a whole, where Sony and Nintendo have strong positions relative to Xbox, but only that it would help it to achieve a dominant position in cloud gaming specifically,” Bailey tells Digital Trends. “Microsoft and Activision Blizzard will likely argue that this is disproportionate, given the relatively small scale of the cloud gaming market.”

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Chai points a finger gun at a robot in Hi-Fi Rush.

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