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Microsoft's Xbox boss: Video games undergoing the 'same transformation' as TV and music did

Daniel Howley
·Technology Editor
·4 mins read

Microsoft (MSFT) and rival Sony (SNE) are set for a November launch of their next-generation game consoles, respectively, the Xbox Series S and Series X and the PlayStation 5 and PlayStation 5 Digital Edition. But they’re already preparing for what comes after these consoles: cloud gaming.

Microsoft currently offers gamers its cloud gaming platform, xCloud, via a $14.99 per month Xbox Game Pass subscription, while Sony is in the process of developing its own service. In fact, it announced that it would use Microsoft’s Azure cloud platform to run its cloud system.

Microsoft’s VP of gaming Phil Spencer told Yahoo Finance’s On the Move that, with cloud gaming, the game industry is undergoing the same kind of transition that Netflix created for the TV and movie industries.

“My TV is with me wherever I go. My music is with me wherever I go. I'm in control of the experience, and I think gaming is going through that same transformation,” he said on Thursday.

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And now even Amazon (AMZN), Microsoft’s rival in the cloud space, is getting in on the trend, launching its Luna cloud gaming platform on Thursday.

Cloud gaming could eliminate the need for new, pricey game consoles, as it enables gamers to stream games over the internet to devices like their smartphones, smart TVs, and laptops. But Spencer says, while cloud gaming will eventually be huge for gamers, Microsoft has no plans to stop making Xbox consoles.

“In terms of future hardware, I think we're going to see more down the road,” Spencer said.

Microsoft's Xbox Game Pass Ultimate includes access to the company's xCloud cloud gaming platform. (Image: Microsoft)
Microsoft's Xbox Game Pass Ultimate includes access to the company's xCloud cloud gaming platform. (Image: Microsoft)

“Just like in video and music, it's not that streaming has cut off device innovation. I think we'll continue to see that and that's absolutely what we're planning for.”

Look no further than modern smart TVs and high-end speakers that can stream music from a smartphone for proof of that.

Microsoft’s Xbox Series S, priced at $299, and Xbox Series X, priced at $499, are set to launch Nov. 10, with Sony’s consoles launching two days later on Nov. 12. While Spencer says that the consoles will offer impressive performance, he talks about xCloud as a way for gamers to take greater control of where and when they play.

“We're about putting the player in the center. It's not about the device in the middle anymore, and you see that with every other form of media,” he said.

While xCloud looks to be the early leader in the cloud gaming market, it’s certainly not the only player. Google (GOOG, GOOGL) currently offers its own Stadia cloud platform, while Nvidia (NVDA) has its GeForce Now service.

That service, which will cost $5.99 per month and is currently available through early access via an invitation, looks like it could prove especially troublesome for Microsoft, as it will include streams from Amazon’s popular Twitch service.

Microsoft’s Bethesda acquisition

Microsoft kicked off the week with the blockbuster announcement that it will spend a whopping $7.5 billion to acquire game publisher ZeniMax Media, the parent company of legendary game developers Bethesda and Id Software.

With game franchises including “The Elder Scrolls,” “Fallout,” and “Doom,” ZeniMax is a massive acquisition for Microsoft, and brings the number of its internal game studios to 23.

Microsoft's $7.5 billion acquisition of Bethesda parent company ZeniMax is a opportunity for it to crush Sony in the coming console war. (Image: Microsoft)
Microsoft's $7.5 billion acquisition of Bethesda parent company ZeniMax is a opportunity for it to crush Sony in the coming console war. (Image: Microsoft)

Spencer confirmed that ZeniMax games will appear on Microsoft’s xCloud the same day they are released in retail, making the service even more worthwhile for dedicated gamers.

But it also leaves the question as to whether Microsoft will bring ZeniMax games to competing consoles like the PlayStation 5 and Nintendo Switch. Making games exclusive to a single console can be incredibly lucrative, as it forces gamers to buy certain systems to access their favorite games.

Microsoft, however, has also shown that it’s willing to share such properties with rivals as evidenced by its decision to put “Minecraft” on the PlayStation 4 and Nintendo Switch, as well as Android and iOS.

“In terms of where games will show up, our commitment is that our games will show up in Game Pass, PC, and on console and be available on xCloud,” Spencer said. “In terms of other platforms, I think we'll take it on a case-by-case basis.”

With such services and new consoles on the horizon, the industry is in for some of its most significant changes in years.

Got a tip? Email Daniel Howley at dhowley@yahoofinance.com over via encrypted mail at danielphowley@protonmail.com, and follow him on Twitter at @DanielHowley.

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