Xbox Game Studios head insists cloud gaming is still "a very, very small market"

Microsoft's planned $69 billion merger with Activision Blizzard hit a big roadblock in April. The UK Competition and Markets Authority rejected the deal, claiming that if it went through, it would allow Microsoft to dominate the cloud gaming market. However, the head of Microsoft's Xbox Game Studios stated in a new interview that cloud gaming isn't really a market yet.

In a chat with The Hollywood Reporter, Microsoft Xbox Game Studios head Matt Booty was asked why Microsoft wanted to pursue the development of cloud gaming. He replied:

For us, to be clear, it is a very, very small market. I’m not even sure you would call it a market yet, in fact. It’s very small usage and very small audience.

Booty added that the Xbox team considers cloud gaming still to be "almost more experimental that we’re trying out to see how it works." The company first announced its plans to stream games from cloud servers back in 2018, under the name Project xCloud.

It first started its limited beta testing in 2019, and in 2020 it officially launched to the public, but still labeled as a beta, for members of the Xbox Game Pass Ultimate service. In fact, Microsoft continues to refer to its Xbox cloud gaming service as a beta. The company has never mentioned any cloud gaming player numbers since the launch.

Booty's comments may be part of a campaign to convince people that the cloud gaming market will continue to be a small part of the company's Xbox plans for some time to come. That could be a big part of Microsoft's appeal of the UK CMA decision to block the Activision Blizzard acquisition.

In another part of the Hollywood Reporter interview, Booty talks about how Microsoft has worked hard so that games that stream on mobile devices like the iPhone, iPad, and Android products work with touchscreen-based controls. He also mentions that Microsoft has thought about what new features games could have while running in the cloud:

That’s a little bit of our job as first party is to think about what are some of those forward-looking, experimental things we could do with cloud, but to me, that has more to do with what are the kinds of games you could make if you knew you had access to a lot of computing power that was off of your computer, off a console, as opposed to just a streaming scenario.

Microsoft hasn't really promoted cloud gaming all that much since its initial public launch in 2020, and it certainly hasn't talked about adding cloud-specific features to games. It will be interesting to see if they do experiment with such features in the future.