Xbox Exec Suggests New Ad-Supported Model for Xbox Cloud Gaming

Microsoft may be ready to start experimenting with a new business model to expand Xbox Cloud Gaming: Watching ads to get free minutes of gameplay. Xbox Chief Financial Officer Tim Stuart suggested this idea while speaking at the Wells Fargo TMT Summit, which was held in late November.

Here is what Stuart said about how to expand Xbox Cloud Gaming during the conference, as reported by TweakTown:

“For models like Africa, or India, Southeast Asia, maybe places that aren’t console-first, you can say, ‘hey, do you want to watch 30 seconds of an ad and then get two hours of game streaming?’

“Africa is, you know, 50% of the population is 23 years old or younger with a growing disposable income base, all with cell phones and mobile devices, not a lot of high-end disposable income, generally-speaking.

“So we can go in with our own business models and say…there’s millions and millions of gamers we would never have been able to address there, and now we can go in with our business models.”

When Microsoft officially announced Project xCloud, which became Xbox Cloud Gaming, the company said that it would be a way to reach the 3 billion gamers on the market. However, as the company admitted during the FTC v. Microsoft trial, the majority of the usage comes from Xbox gamers checking out games before downloading them.

As of today, Microsoft offers access to a library of over 100 Xbox games via the cloud with an Xbox Game Pass Ultimate subscription ($16.99/month). However, Fortnite is also free to play on Xbox Cloud gaming. Microsoft said last year that it was looking to make more free-to-play games available on Xbox Cloud Gaming, but it didn’t happen.

As you can imagine, running a cloud gaming service at scale is expensive. We’ve seen Netflix and Disney+ introduce ad-supported tiers last year, but it remains to be seen if the same business model can easily be applied to Xbox Cloud Gaming.

Moreover, even with ideal bandwidth conditions, playing games designed for a console on a smartphone with a much smaller screen is always going to be frustrating. As Microsoft already realized, Xbox Cloud Gaming is probably more of a “nice-to-have” feature than something you may want to use as your main way to play games.