Microsoft is Already Winning in Cloud Game Streaming (Premium)

 

I’ve been pushing the notion that Microsoft could win big in cloud-based game streaming since before the firm announced its xCloud plans. But with this week’s Sony partnership, it appears that Microsoft has locked in a winning strategy for the future. And that’s true even if its own service isn’t the most popular.

OK, let’s level-set here for a moment.

In case you missed it---and there is absolutely no way you missed it---Sony and Microsoft have announced a blockbuster new partnership in which Sony, today’s clear leader in video games, will use the Azure-based cloud computing infrastructure of Microsoft, today’s clear also-ran in video games, to drive its next-generation game streaming service.  While this kind of coopetition is not necessarily uncommon or unusual, in this case, I think it speaks to the seismic shift that’s about to hit the video game industry. And it’s something I’ve been writing and talking about for years.

It goes something like this.

Since entering the video game market in 2001 with the Xbox, Microsoft has come in a distant third with each of its consoles. Sony hasn’t always dominated the market: The previous generation of consoles was won by Nintendo, thanks to the Wii, and Sony came in second place. But with the current generation of consoles, Sony has surged to a first-place finish and is the clear winner.

But the video game market is about to shift, just as it did previously with music, movies and TV shows, and other contents, from physical media to digital media, and now to streaming. And streaming requires a scalable and distributed cloud architecture, something that only a small handful of companies---Amazon, Microsoft, and Google among them---can provide. So, there is some irony in the fact that Microsoft, a perennial loser in video games, could emerge as a winner in this coming generation of game streaming.

To many, this means, or meant, that Microsoft, thanks to its in-house Azure infrastructure was poised to have the very best cloud-based gaming service, which is now called xCloud. But that view was always short-sighted. Yes, Microsoft can and will take advantage of Azure for xCloud. But this is the new Microsoft, the Microsoft that partners with anyone, friend and foe alike. And that means that the bigger play, almost certainly, will be serving other game makers with Azure.

To this end, I had predicted that Microsoft would see great success with individual game publishers and, perhaps, with one of its primary console competitors, Nintendo. Because, after all, Nintendo has a real hole when it comes to the cloud and online services.

But Sony. No. I didn’t see that one coming.

Sony’s partnership with Microsoft in cloud gaming means that Microsoft could win in the coming generation of video games even if Microsoft loses that generation with its own service.

I should temper this a bit before anyone gets too excited: It is highly likely, if not certai...

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