Microsoft is creating a new dedicated division focused on the development and improvement of cloud streaming services for games. The news comes from an interview with the head of the new division, Kareem Choudhry, conducted by The Verge. She revealed that Microsoft had actually started the new division at the end of last year. With Microsoft's acquisition of PlayFab, a backend service for developers, in late January, it is clear that the company is investing heavily in cloud streaming for games. Microsoft have also purchased Havok in 2015 and Simplygon in 2017. While other companies have invested in cloud gaming before, the size of Microsoft and their investments makes them the leaders. With a multinational corporation spearheading cloud development, how will this affect Microsoft products and the gaming industry as a whole?

Microsoft's edge over other platform

Other companies have invested in cloud gaming. Sony bought out OnLive in 2015, shutting it down, and Gaikai for $380 million to power their Playstation Now service. For PC, Nvidia offers Geforce Now, which includes titles Deus Ex: Human Revolutions, Batman: Arkham Knight and the Witcher 3. Both Nvidia Now and Playstation Now are rudimentary, offering few new releases and barely managing latency. An indication of this when Sony discontinued streaming to platforms other than PS4 and PC in August 2017. This, however, is Microsoft's third acquisition into cloud gaming and it highlight's their intentions.

The Last of Us streaming on PlayStation Now. Source: The Verge

In the interview with The Verge, Choudhry states “we believe there is going to be 2 billion gamers in the world, and our goal is to reach every one of them.” While they have no official announcements, Microsoft clearly aim to launch their own cloud streaming service. All signs point to this being the Xbox Game Pass. Currently, the Xbox Game Pass stands head and shoulders above other services like EA Access. While Playstation Now is streaming based, Xbox Game Pass lets users download and play the games from their console. Back in January, Microsoft's Head of Gaming, Phil Spencer, announced that the Xbox Game Pass will feature first-party titles, like upcoming Halo, Gears of War and Forza games, on launch day. Where Sony fails to deliver current and new releases, Microsoft is dedicated to it.

A collage of the games available through Xbox Game Pass. Source: Xbox.com

With such a strong on-demand game library, a strong cloud service is its natural extension. This would effectively see Microsoft transforming their cloud services and game services into a Netflix for games. Furthermore, the widespread presence of Microsoft, not just in the Xbox market but through Windows PCs, would completely dominate the competition.

How will this affect the industry?

The key difference between Microsoft's investment into cloud gaming and other companies is what they're investing in. Where other companies are powering their online services through cloud databases, Microsoft is powering their development tools. The Verge states that this new division is an enticement for developers to use Microsoft's cloud tools. For example, Microsoft's Azure, which is not specific to gaming, is such a strong cloud tool that companies like Ubisoft, with Rainbow Six: Siege, use the service to host servers, not just for Xbox but all platforms.

Microsoft Azure is a development tool used for any and all applications, not just gaming. Source: Onlinebooksreview

As games are moving into the multiplatform space, developers need a cloud based service that is universal. This allows for Microsoft to spearhead cross-platform innovation, such as Fortnite on Xbox being cross-platform for all platforms except PS4. This is a recurring trend, of Microsoft leading the charge in cross-platform play and Sony lagging behind. Kotaku reports that in the case of Fortnite specifically, Microsoft themselves believe Sony is holding back cross-play. Kotaku also point out previous examples of Microsoft opening the gates to cross-play, namely Rocket League, Gwent and Minecraft. Sony has made huge investments into cloud gaming, but it's to power their own service. Microsoft has made huge investments into cloud gaming to empower developers through, and ultimately make them rely on, their development tools.

Fortnite is launching for mobile devices and cross-platform connectivity is key to its success. Source: Fortnite's Twitter

In Summary

The implications of Microsoft's new cloud gaming division are potentially huge. Since the launch of Xbox Live in 2002, Microsoft are the leaders in online gaming services. With this dedicated division, expect the Xbox Game Pass to launch into the cloud. However, this won't just affect the Xbox platform, but the industry as a whole. While under the Xbox branch, their investments are not exclusive to the console or even gaming. As a result, Microsoft are putting themselves in-front of the competition by making the competition need their services.

What do you think about cloud based gaming? Do you expect this to be a deciding factor in the console wars? Or should Microsoft learn from Sony and Nintendo and invest more in their games? Let us know in the comments below