Home > Latest News > COMMENT: Is Microsoft Set To Seriously Hurt Sony’s PlayStation Strategy?

COMMENT: Is Microsoft Set To Seriously Hurt Sony’s PlayStation Strategy?

Has Microsoft finally got a big advantage over Sony and their PlayStation with the beta testing of xCloud in Australia. which some say is the future for gaming platforms.

Recent delays in getting the new PlayStation 5 and the Xbox Series X and the Xbox Series S into the hands of consumers due to COVID-19 component shortages may have played into the hands of PC manufacturers who are witnessing a boom in demand for powerful gaming machines.

During the past 24 months we have seen an explosion in new PC gaming hardware from the likes of Acer, MSI, Dell with their Alienware brand and Lenovo with their Legion gaming brand.

This bodes well for retailers such as JB Hi Fi, Harvey Norman and above all the specialist gaming channel who are benefitting from an explosion in demand for PC gaming hardware and accessories spanning graphic cards, mice, gaming keyboards and 120MHz monitors that are in some cases selling for double the price of a Sony or Microsoft gaming console.

Overnight Microsoft unveiled a batch of new titles for Xbox at the world’s premier video game trade show, including award-winning sensation “Hades” and long-time hit “Halo”.

The Xbox maker showed off 30 new games coming to its console, which in the future will be available via XCloud to PC users.

Microsoft recently-acquired Bethesda Softworks, the maker of hits including “Fallout” and “Elder Scrolls.” As trailers depicted tense battles and the games’ rich graphics, Microsoft stressed that all but a few would be available for play at its subscription Xbox Game Pass service.

The company also highlighted titles that will be exclusive to Xbox, which competes with rival consoles Sony PlayStation.

The executive vice-president in charge of Microsoft’s Xbox gaming business, Phil Spencer recently revealed the existence of a “blade” gaming console of sorts that fits into a server.

Yes, it’s a console, but it has no hand-held controllers, no Blu-ray drive, and doesn’t plug into your TV.

It’s a stripped-down version of the Xbox Series X console that slots into racks alongside thousands of other server blades deep inside Microsoft’s Azure data centres around the world allowing users to access games from a PC, tablet, or mobile phone.

In the future this technology could serve up games to PC users eliminating the need for a console.

Development of a console such as the PlayStation 5 and the Xbox is expensive and to get a return on investment the console developers have to keep console models in market for several years, in the case of the PlayStation 5 seven years between the PlayStation 4 and the latest five model.

In that same period, we have seen dramatic improvements in PC chipsets, boards, and above all the graphic cards and audio chipsets for PC’s.

In the console market Microsoft is lagging behind Sony in the console market but what they do have is a Windows OS that is set to be moved to a Windows 11 version complete with new gaming capabilities.

Creating a direct relationship between their Azure cloud backend and gamers puts Microsoft in a box seat as gaming by majority heads to a PC driven industry where retailers and gaming specialists benefit from a hardware sale and Microsoft from a software sale or annual subscription.

Spencer told the AFR recently that for overwhelming majority of the world’s population, who either can’t afford to buy a console or don’t want to be physically tethered to one, the “blade” is the future of video gaming.

xCloud, which Microsoft has already released in North America and parts of Europe and Asia, and is currently undergoing beta testing in Australia could become the ultimate gaming platform as it will allow owners of a Microsoft’s Xbox Game Pass subscription to log into an Xbox blade from their mobile phone, tablet, PC or even from an app running on their TV, and play high-quality “AAA” games as if they had their own Xbox Series X console attached to the device.

The XCloud is still in development stages but when running at its full potential it will be a real threat to Sony who don’t have the installed base that Microsoft has around the world.

According to the AFR Microsoft is working on “multi-tenancy” software that would allow multiple users to play on the one blade at the same time, the way users of other, non-gaming cloud services have been able to share computers.

For Australians broadband doesn’t even need to be ultra-low latency, such as the connection touted as being possible on 5G.

So long as the latency is consistent which is why we are seeing the growth in Wi Fi 6 routers which are designed to control multiple devices while deliver better latency.

“When I think about reaching the 3 billion people who play video games today, our ability to deliver AAA games to any screen that someone already owns has to be the place we will find the most customers,” Spencer told the Australian Financial Review.

“But as you think about the role that gaming can play globally, it should be an inclusive art form, not an exclusive art form. And clearly price point and access are two things that we can push on to make it more inclusive to more people.

“We might end up with more consoles in data centres than we do in people’s homes,” he says, adding that Microsoft has already installed “hundreds of thousands of blades” in Azure data centres around the world.

As for Apple and their gaming strategy, they are trying to milk revenue from the game’s developers.

Apple has prevented Microsoft from publishing a Game Pass app that would let users pay a subscription fee then play any game they choose inside that app.

Instead, Apple has demanded Microsoft creates a separate app for every game that can be played in the cloud, for individual vetting by Apple employees: a move that Apple’s critics claim is tantamount to demanding Netflix creates a separate app for every movie and every show on its service.

One such critic is Tim Sweeney, the CEO and co-founder of Epic Games, publisher of the smash hit game Fortnite.

Tim Sweeney of Epic Games has recently sued Apple in Australia and in the US, complaining that Apple routinely abuses its App Store policies, creating arbitrary rules that are designed to eliminate competition and maximise Apple’s profits, at the expense of third parties such as Epic and Microsoft.

Last month when an Xbox executive, Lori Wright, testified in the Epic lawsuit in California, Apple asked the judge to ignore her testimony, arguing that “Microsoft shielded itself from meaningful discovery in this litigation by not appearing as a party or sending a corporate representative to testify.

Spencer says Microsoft is uniquely positioned to do well from the shift to cloud-based gaming.

“The uniqueness that we have in Azure is we are also a game company,” he says.

“If you look at Amazon Web Services, if you look at Google Cloud, they are not native game companies. We build our own games using Azure, we run Xbox Live on Azure.




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