Microsoft addressed the future of cloud gaming in its lengthy response (opens in a new tab) to the UK Competition and Markets Authority’s (CMA) decision to launch an in-depth “Phase 2” investigation (opens in a new tab) into the purchase of the company by Activision Blizzard. It turns out that, aside from the marketing for Microsoft’s xCloud game streaming service, the company’s outlook for cloud gaming is pretty bleak, at least for the short term.
Cloud gaming is “a new and immature technology that the CMA recognized faces significant challenges”, writes Microsoft, adding that consumer adoption of the technology “is not expected to be fast as it requires a significant change in consumer behaviour”. Rather than an imminent cloud revolution, Microsoft expects “PC and console gamers will continue to download the vast majority of the games they play” instead of adopting streaming alternatives.
It’s a marked difference from the company’s bullish public stance on its own xCloud service. At an E3 event three years ago, Xbox boss Phil Spencer stood on stage (opens in a new tab) and touted the service with characteristic enthusiasm, but it seems that Microsoft privately has much more muted expectations for both xCloud and game streaming as a whole.
Microsoft is downplaying (or honestly describing) the near future of cloud gaming to counter the CMA’s argument that it could use its purchase of Activision Blizzard to freeze out competitors in the game streaming market. Instead, Microsoft argues that, because adoption of the technology has been so sparse, “Damaging or degrading rival services would significantly slow adoption of this technology,” which would only benefit “market incumbents” such as Sony on console, Google and Apple on mobile, and Steam on a computer
Rather than tightening its grip on cloud gaming, Microsoft argues that it would benefit much more from encouraging “the widespread adoption of cloud gaming technologies by as many providers as possible”. That, Microsoft says, would help spark the “major shift in consumer behavior needed for cloud gaming to succeed.”
So, basically, Microsoft is arguing that it has no interest in monopolizing cloud gaming because there is hardly anything to monopolize. The technology is still so embryonic, and its adoption so minimal, that the main challenge for the foreseeable future is to convince players that the technology is totally worth their time, no matter who provides it. Given the impending death of Google Stadia (opens in a new tab)it’s hard to find fault with Microsoft’s argument.