Xbox intended to launch a hybrid cloud console in 2028

Please note: the leaked information from 2022 is subject to change based on shifts in Xbox’s strategy.

An Xbox strategy document from 2022 leaked during the FTC proceedings on the Activision Blizzard merger. The?leak flooded the internet with information and news articles about Microsoft’s gaming strategy towards 2030?(as of 2022).

Before continuing, we’d like to highlight that gaming is a fast-moving industry, and?Xbox’s plans might have changed?based on ongoing market developments, cloud gaming usage, and other factors. Microsoft Gaming’s CEO Phil Spencer has already alluded to shifts in the strategy.

Still, perhaps the biggest news from the leak was Xbox’s?plans to release a cloud-hybrid?console in 2028 that combines the user’s local native hardware with Xbox’s cloud servers.

In practice, this means?part of a game would be processed on “the box” while other parts would be processed via the cloud. This is a continuation of a strategy Xbox has dabbled with, converging its cloud- and service-based trajectory.

Such cloud-enabled?games have the potential to push the medium forward, giving game developers—and, therefore, players—access to processing power and experiences not even currently possible (natively) on even the highest-end PCs.

Xbox has already leveraged the cloud to power taxing explosion technology in?Crackdown 3’s multiplayer and has used cloud computing techniques in?Microsoft Flight Simulator?(via Microsoft Azure) to map out a true-to-life planet Earth.

The latter game was a huge moment for cloud-enabled experiences—combining big data, cloud-based processing, and AI-based realism to create a brand-new experience for gamers that was lauded by fans and critics alike. If the leaked plans are to be believed, Microsoft hopes to apply a similar approach to the new generation of Xbox.

In fact,?Xbox already?officially?announced plans to work on a cloud game with well-known game maker Hideo Kojima?(of?Metal Gear?and?Death Stranding?fame). The technology is undoubtedly exciting and could push the industry forward, and we have already had clients ask about the viability of a hybrid games console.

The main question around a hybrid cloud console is whether it is viable. The short answer is not right now. But by 2028 onwards? It’s definitely possible.

Let’s dive a little deeper.

Many factors point to the viability of a more digital, cloud-hybrid console. For example,?the games market has moved towards digital faster than most people expected. You can find our breakdown of the digital-to-physical divide in the free edition of our 2023?Global Games Market Report.

Xbox has pushed people in digital and cloud-based directions with Xbox Game Pass and its?emphasis on the digital-only Xbox Series S?(its largest console by installed base). The leaks also highlighted a potential mid-gen Xbox Series X refresh that would be digital only, pushing consumers even further to digital ahead of Xbox’s next generation.

One big concern about a cloud-reliant console is slow internet speeds. Many gamers' internet connections are neither strong nor stable enough to play through the cloud—especially in countries like the US (Xbox’s biggest market). There, many consumers have data caps and would have to pay more for data-heavy cloud gaming.

That said,?there is a huge push for fiber internet coming to the US right now, which optimistically will increase internet speeds in the coming years. And signs point to regulators treating ISPs more punitively in the US, hopefully curbing some of the country’s arguably anti-consumer data caps.

In general,?internet speeds are improving, cloud gaming user numbers are on the up?(and more platform holders and publishers are investing in a cloud future). Multi-game subscriptions are putting more emphasis on cloud gaming value-adds across the board, too.

Latency, the delay between the player’s controller input and the output on their screen, is also a big concern. However, hybrid processing could mean that latency-sensitive aspects of games can be processed locally (inputs for characters in fighting games, for example). Meanwhile, the less gameplay-sensitive factors (explosion physics, background animations) could be rendered via the cloud.

The leak also showed a new Xbox Wireless Controller that—like Stadia’s controller before it—could connect directly to the user’s Wi-Fi, therefore bypassing a ''hop'' to the console itself and reducing latency.

Simply put, there are many potential speedbumps for a hybrid-cloud console, but these bumps are certainly passable, under the right conditions. Right now, though, players prefer native hardware, and moving them over to the cloud is a key challenge. It will continue to be an obstacle for some time.

A hybrid stopgap between native and cloud might be one way to push consumers over the line, but it would—of course—remain a challenge for the industry.

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Source: All data included in our LinkedIn Newsletters are from the Newzoo’s Platform. ?

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About the writer:

Michael Wagner, Senior Market Analyst, is a passionate gamer at heart. Michael has been analyzing the business world for well over a decade, across consulting, data analysis, marketing, and more. A big chunk of those years has been focused on gaming. During his time as a marketing manager at Good Shepherd, he brought high-profile games to market—from pre-production to post-launch. Now at Newzoo, Michael helps the world’s biggest publishers and developers supercharge their strategies—all while flexing his gaming knowledge, data acumen, and eye for future trends.

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