Console vs. cloud: What Microsoft’s new Xbox Series X says about the future of gaming

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A few months after the announcement of Project Scarlett, Microsoft took to the Game Awards stage on Thursday night to debut the next Xbox by its new, official name: the Xbox Series X.

Much of what Microsoft has said so far about the new console is what you’d expect from a new video game system. The Series X will ship next year with a solid-state drive for lowered or eliminated load times, and features an assortment of special hardware that makes it the most graphically powerful system in the Xbox line so far.

The most interesting part of the Series X announcement, however, is one particular bit of emphasis, placed by Phil Spencer, head of Xbox, in his post on the official Xbox blog.\

“The name Xbox is an expression of our deep history in gaming, our team’s unrelenting passion, and our commitment to both our fans and the future of gaming at Microsoft. It also signifies our belief that a gaming console should be for just that – gaming,” Spencer wrote. He added later, “As we branch out and extend gaming to more players around the world, console gaming will remain at the heart of our Xbox offering.”

There’s a lot being discussed about the Series X right now, primarily the case design (which looks like it was primarily inspired by one of the monoliths from 2001: A Space Odyssey), but this is worth going back over. It’s a subtle reversal of a lot of the moves Microsoft has been making with the Xbox in the last couple of years.

It was always close to certain that there’d be a new Xbox for the ninth generation of video game consoles, as the Xbox One was never actually a failure. It has an installed base of over 41 million by now, with a dedicated community. However, its sales have slowed down in 2019, and over its lifetime to date, it has sold not quite half as many units as the competing PlayStation 4.

In a seeming response to that, Microsoft’s last big moves around the Xbox One have consistently changed some of the fundamental elements of what makes it a video game console. Examples include the All-Access program, the two Xbox Game Passes, and the All-Digital Edition of the standard Xbox One.

Microsoft’s Project xCloud technology, which entered testing earlier this year, further serves to decouple Xbox games from the actual Xbox, by allowing users to stream their games from Microsoft’s servers on almost any compatible connected device. Microsoft announced last month that XCloud will be coming to Windows 10 as well as the Xbox platform.

The first challenge of the Series X, then, is to overcome Microsoft’s own initiatives, to give the consumer a reason to buy one. While Spencer does make sure to mention cloud technology in the piece, it’s played down in comparison to the Series X’s hardware specs and its focus on backwards compatibility. The Series X is a console, Spencer writes, meant for console gaming, at a time when Microsoft has been working to fuzzy up the definitions of the term. (If you’re playing a console game on a phone, via a cloud connection to your Xbox Live account, is it still a console game?)

Part of that deliberate reframing, to my mind, is probably due to Google Stadia. It’s been a hot topic this year, since its debut in March, and represented a big step forward for cloud-based gaming as well as Google itself. By now, a lot of games industry analysts, including me, expected we’d be talking about Google as a new fourth contender in the console wars.

Last month saw Stadia’s public launch, however, and almost a month later, it appears to have been a flop. While Google hasn’t disclosed its sales figures for the Stadia, analysts have noted that the base Stadia application has only been downloaded about 175,000 times. For a video game console, it’s an amazingly soft launch.

Google gaming exec Phil Harrison shows the Stadia controller. (Screenshot via YouTube)

This past summer, with Stadia’s initial hype in full swing, it seemed like the cloud was the next frontier for video games. For consumers, cloud-based game streaming is a portable service that doesn’t need expensive hardware of lengthy installation times; for developers and publishers, it means they don’t have to host their own servers, print discs, or put up with the resale market any longer. It’s a much better deal for the latter than the former, of course, but it was easy to see why Sony and Microsoft were getting ready to jump into the market.

After Stadia, however, it’s easy to see why the Xbox might be refocusing on its hardware. Google stuck its neck out with Stadia, to see if the market would accept games that were only on the cloud, and so far, the answer appears to be mostly no. There’s nothing inherently self-defeating about the typical console market model, after all; it’s more or less worked for the Xbox so far.

In retrospect, this also fits with Microsoft’s attempts to deepen its bench, acquiring popular independent developers such as Double Fine (Psychonauts 2, Brutal Legend), Obsidian (The Outer Worlds, Fallout: New Vegas), inXile (Wasteland 3), and Ninja Theory (Hellblade, the forthcoming Bleeding Edge). Consoles traditionally live or die by their exclusives, and big games are a huge incentive for people to stay connected to the Xbox ecosystem.

This does seem to represent a sea change, though. A few months ago, Microsoft seemed intent upon disrupting as much of the traditional video game marketplace as it could reach, lowering or eliminating its barriers to entry and adopting a dramatically different sales model. With the announcement that the Series X represents a new commitment to console gaming, rather than a move to a whole new market model, it seems like Microsoft may be learning from Google’s mistakes.