In early 2022, Microsoft made headlines with its announcement to acquire gaming giant Activision Blizzard. This move triggered a legal battle with the Federal Trade Commission (FTC). Recently, the US Courts released a series of internal emails exchanged among Microsoft employees in 2021. These emails shed light on Microsoft’s plans to bring PC games to Xbox Cloud Gaming, a move seemingly prompted by the competitive threat posed by Google’s now-defunct Stadia service.
The Competitive Landscape in 2021
The emails reveal a conversation between Microsoft CEO Satya Nadella and key employees concerning the possibility of using Microsoft’s Azure servers to stream PC games through Xbox Cloud Gaming. Despite the demise of Google Stadia, Microsoft contemplated pushing forward with this initiative. Nadella’s initial email referenced a 9to5 article discussing Google Stadia’s job listing for a white-label future. He questioned whether Microsoft should pursue a similar strategy for Game Pass PC, suggesting that they could offer cloud gaming as a Platform as a Service (PaaS) backend.
Phil Spencer, the CEO of Microsoft Gaming, responded to Nadella’s email within an hour, emphasizing the cost-effectiveness of Google’s approach and the potential for Microsoft to achieve similar efficiency by streaming PC native games through Azure GPU SKUs. Spencer’s remarks hinted at Microsoft’s intention to provide a white-label cloud gaming service akin to what Google had contemplated for Stadia.
Kareem Choudhry, Head of Microsoft Cloud Gaming, joined the conversation, concurring with Spencer’s assessment. Choudhry revealed that he and Sarah Bond, Head of Xbox Creator Experience, were actively working on developing a suitable Azure SKU to meet customer demand for Infrastructure as a Service (IAAS) and to support the xCloud PC streaming stack.
Factors behind the delay
The emails make it evident that Microsoft has devised a plan for streaming PC games via the cloud as of July 2021. However, two years later, this feature is not yet available to the public. One possible explanation is that Microsoft may have deprioritized this feature after Google Stadia’s shutdown. Nonetheless, Phil Spencer’s email implies that Stadia was not perceived as a significant threat, with his acknowledgment that NVIDIA’s GeForce Now posed a more formidable competition.
Therefore, the decision to delay the release of cloud gaming capabilities appears to be an independent one, possibly driven by a desire to enhance the features of Xbox Game Pass rather than solely a reaction to market competition. Despite its apparent readiness in 2021, the feature remains elusive to the gaming masses.
Cloud gaming, indeed, seems like a straightforward and highly desirable feature that would cater to the preferences of many gamers. However, its absence from the public sphere raises questions about its delayed availability. While the competitive landscape may have played a role, it is essential to consider other factors that could have influenced Microsoft’s decision-making process regarding this feature.
The acquisition of Activision Blizzard by Microsoft in early 2022 was undoubtedly a significant development in the gaming industry. This strategic move signaled Microsoft’s commitment to expanding its presence in the gaming market and bolstering its gaming portfolio. The subsequent legal battle with the FTC added a layer of complexity to this acquisition, requiring careful consideration of its regulatory implications.
In the midst of these developments, the release of internal emails from 2021 sheds light on Microsoft’s forward-thinking approach to cloud gaming. The exchange between company leadership, spearheaded by CEO Satya Nadella and Phil Spencer, revealed a proactive stance in response to competitive pressures, notably from Google’s Stadia service.
The core concept discussed in these emails revolved around leveraging Microsoft’s Azure servers to stream PC games through Xbox Cloud Gaming. This approach aimed to provide a seamless and accessible gaming experience to a broader audience. While Google Stadia served as a reference point, it is clear from Phil Spencer’s email that Microsoft perceived other competitors, such as NVIDIA’s GeForce Now, as more immediate challenges.
Despite the evident readiness and strategic intent in 2021, cloud gaming’s delay in reaching the public raises questions. While the demise of Google Stadia may have shifted priorities, Microsoft’s decision appears to be an independent one, driven by a desire to enhance the offerings within Xbox Game Pass.
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