The other big disadvantage is that after a few years, Microsoft will most likely reuse their cloud servers for other games, either crippling your game (or at least taking away any advantage the cloud servers gave you), or rending your game unplayable.
This should only be used for first party or exclusive MMOs or other online-only games. I don't see how this would make sense for 3rd party developers and non-exclusive games that need to sell on all platforms to make money, as that would just mean they have to spend extra time developing on two sets of servers (MS and Sony / Amazon or whoever they use).
I also fail to see the difference between this and current MMOs that already have lots of server side processing. I am assuming that Microsoft will charge developers / publishers money for the use of their servers, as they do not usually give things away for free.
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