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EpicRandy on 11 May 2023
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aTokenYeti said:

I think Microsoft exiting cloud gaming is wishful thinking. I would frankly love it if they did that, but it is clearly a key strategic interest for the company and they even designed the console around accommodating the push for cloud, to the console’s own detriment (it costs a fortune to make because every series X chip is a server grade part)

10 years from now I think Xcloud will be remembered as another Microsoft boondoggle that cost them ABK and set them back in the console market. I don’t believe cloud gaming is a viable market

It certainly is an extreme scenario but don't think it amounts to wishful thinking when you weigh the pros and cons.

Pros: 

  • Xcloud can lower the entry barrier to gaming
  • Can be very helpful in some markets

Cons:

  • XCloud is not the best option out there in terms of performance.
  • Have yet to make any significant impact.
  • Cannot stand on its own (need to be bundled with GPU)
  • Is now preventing a $70B merger to complete
  • Will prevent the benefits of having ABK library on GamePass
    • ABK library is key to many markets where Xbox+ Bethesda + Mojang is still unable to appeal properly
  • Dropping Xcloud can be mitigated by other factors.
    • Increase series x production capacity
    • MS can re-enter the market in just a few years arguing that the market has precised itself sufficiently to rule out CMA arguments.
      • If CMA disagrees then, they are the ones who'll face an uphill battle against MS and would likely need to do so upon actual measurable impact on competition rather than prediction.
    • Xbox can still benefit from 3rd parties deals associated with cloud gaming, especially BYOG ones.
    • MS would probably see an increase in Azure usage and revenue from those 3rd parties as they grow.

However, the thing is MS is in no hurry anyway. CoD marketing deals more than likely would prevent them to add CoD to Game Pass until the end of 2025 anyway so they absolutely will litigate the shit out of the CMA decision in the meantime. Cause that's a calculation that's even easier to do, spend a few $10s of millions in legal fees to try to save a market worth $100s of millions sure. But, if push comes to shove would MS try to save a market that's worth $100s of millions that prevents them from greatly increasing the appeal of another already worth billions? They had to have extreme faith in the short-term benefits of Xcloud or that they can sufficiently replace the benefits of the ABK merger with other ones to do so.

That said there are probably less extremes options that can also bypass CMA's conclusion for the cloud market, I just don't know what they are.

Last edited by EpicRandy - on 11 May 2023