We already know Microsoft is developing its next Xbox console under the codename Project Scarlett. There are a growing number of hints that the console could be focused on cloud gaming and streaming. We’ll get to those hints, but first Xbox chief Phil Spencer has said he sees the future of gaming as the company’s Project xCloud and Game Pass.

Spencer spoke at the recent Barclays Global Technology, Media and Telecommunications Conference in San Francisco. He discussed his vision for the future of Xbox and gaming in general:

“We’ll have multiple business models that will work with streaming, but the connection of streaming with the subscription model makes a ton of sense,” said Spencer. “You see it in music. You see it in video. So, you can look at Project xCloud and you can look at something like Game Pass, and you can see there’s natural synergies.”

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Xbox Game Pass has enjoyed solid growth since its launch in May 2017. It gives gamers unlimited access to over 100 games for $9.99 per month. This year, Microsoft announced all its first-party exclusive games would arrive on the service on the day of launch.

As for Project xCloud, it is a cloud product where games would run in a server center managed by Microsoft. Users would not need huge processing power, so triple A titles could play on mobile devices.

“For us, it’s all about how we reach 2 billion gamers,” said Spencer. “If you build the market around a couple hundred million people who are going to own a game console or a high-end gaming PC, then your business-model diversity can actually narrow because your customers are narrow. But when you think about reaching a customer with this content where their only compute device could be an Android phone, you think about, well, what are all the ways that person pays for content if they do at all today?”

Cloud Future

Of course, Game Pass and streaming are perfect allies for Microsoft’s overall cloud-first strategy based on subscription services. However, if any game can play on any device, where does that leave Xbox consoles. Will gamers of the next generation need a console?

We have previously reported that Microsoft will release a special edition Xbox One with a disc drive next year. Gamers are increasingly moving to streaming and this console will meet their needs. Could Project Scarlett be the next step and arrive as essentially a streaming cloud box?

Microsoft’s ambitious plans for gaming have turned hardcore gamers away before. During the launch of the Xbox One, the company attempted to sell the console as a living room entertainment station. Gamers were cold to a gaming-second strategy and went to Sony’s PS4 instead.

Would a cloud streaming console arrive too soon for the market? It’s a question Microsoft will have to answer.

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