Analyst: Xbox Streaming Could Help Microsoft Get Back On Top

Xbox One

There’s no question that Sony is dominating gaming right now with its PlayStation 4, followed closely behind by Nintendo and its Switch console hybrid. But Microsoft isn’t giving up just yet, promising to push its Xbox brand back into the fold in a big way.

One analyst, however, believes he has a pretty good idea for what can help Microsoft earn its top spot again.

Speaking with GamesIndustry International, SuperData Research CEO and co-founder Joost van Dreunen addressed the idea of streaming games on console. While Sony tried to do this with PlayStation Now and sort of failed (it still has a decent user base but not an overwhelming one), it seems that its attention went more towards bigger games instead of creating an affordable service.

"With an install base of 75 million that makes sense for now," says van Dreunen. "But it does not provide an answer to the question what the future holds. Worse, it is inconsistent with the direction senior management recently revealed -- plans to focus on subscription revenue from online gaming and streaming music and video."

He then turned to Microsoft and talked about how improvements to Xbox Game Pass could mean big things for the company in the future. "In particular, this last part is promising," van Dreunen says. "Although Microsoft has failed to win the centre of the living room as it originally set out to do, it is setting itself up to become the leader in the digital games market by equally amassing content and focusing on distribution rollout. It is possible that a few years from now Microsoft will be the Netflix of gaming and Sony more like HBO.

"But a digital future is about scale and infrastructure, which means that Microsoft may yet claim the centre."

Another analyst, IHS Markit’s Piers Harding-Rolls, felt that Sony leaving PlayStation Now out of its press conference was a bit of a stumble. "As the market becomes more digitally enabled and service based, console companies and publishers are starting to map out their longer term strategies including the building out of subscription cloud gaming services," he says. "There is no cloud-based service that replicate the console offer at present. Indeed, those companies interested in cloud gaming view it as a means to engage a broader audience - an additive play rather than one that necessarily replaces existing practices."

There’s no question the company could do something in the future, but it seems that van Dreunen is suggesting that Microsoft should consider making a move to push it forward. The real question here, though, is will they do it.

"As the market shifts, Microsoft is strongly positioned due to its Azure capability," Harding-Rolls says. "If you agree that the eventual future of games consumption is through cloud gaming services, then those companies with a strong position in cloud are likely to be best placed to benefit from the transition. In this context, Microsoft's cloud division gives the company a natural advantage when trying to build a profitable business.

"While Microsoft competes directly with Sony at present, it will be aware that as it builds its games-relevant cloud offer that it will increasingly compete with the other cloud vendors, all of which have a presence and role in the games value chain. This includes Amazon, Google, Tencent and Alibaba."

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You can read more on this analyst over at GamesIndustry International.

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