Microsoft is trying to become the 'Netflix of Gaming,' putting it on the path to $1 trillion

The gaming business is seeing a shift away from hardware and into software and streaming, which is in Microsoft's wheelhouse, and could be what propels it to a $1 trillion valuation, according to Morgan Stanley.

[corroios]

I think its clear that's the path for Microsoft. A service available on all platforms.

[conanlifts]

Most likely. The thing they need to take note of is that netflix now produce a lot of their own quality shows. To succeed MS need to produce more games than they have ever done. They also need to be high quality. If they do this they will succeed. Until then i feel Sony could unseat them at any time by doing the same thing ( not streaming) and adding their own 1st party catalogue.

[naruga]

they will fail horribly as PS Now did.....games are not movies , and MS (as in holywood ) fail to understand that ...also there is the lack of Japan support ...and as i have repeated again No Japan=NO success in gaming , its a rule

[Prince_TFK]

PS Now is streaming. Xbox Gamepass is not. You don’t get crazy latency like you do with Ps Now.

Oh and Naruga, it is not a rule. It is just something you made up.

[Bruh]

Very good point and I do think that investment is there, you just won't see it with this generation. Most likely the next, right now for MSFT is about laying the foundation to make these services be cemented properly with quality 3rd party support and launch support from their exclusive titles.

[Godmars290]

Not seeing how Sony can "unseat" MS when when they - Sony - are leading.

I mean, yes, MS very much have the mechanics for a streaming service in place, but they continue to have issues with content. All of their in house IPs have only degraded in quality, and anything 3rd party by nature is available elsewhere.

Also can't help but mention that the very example of Netflix doesn't help them, or shows their greatest faults. Was a service they had exclusive rights to for nearly a year yet because of the insistence of requiring an XBL gold sub to access it, that exclusivity did nothing for them. Whereas when it came to the PS3, which had no additional fees and a smaller install base vs the 360, that became the #1 platform for the service.

[KillBill]

@naruga - Japan has near zero affect on gaming as compared to how it used to. EU has surpassed it in a huge way and Japan is almost ready to be simply added to the 'rest of the world' category.

[Godmars290]

@KillBill"

"Near zero"? Really?

JRPGs have certainly stagnated but much of the indie/middleware scene is flooded by weeaboos if not actual JP devs and studios looking to expand into the Western market. Then there's the Asian market itself, most of which is still Japan.

[conanlifts]

@godmars
When i say unseat them i do not mean ps4 vs xbox etc. I mean unseat their future plans. Gamepass has the potential if it works to bridge the gap and you could theoretically have it running via an emulator on the ps5. No streaming would be required for this. In fact with scaleable software it could also work to an extent on switch or more likely switch 2. This would alter the gaming ambitions to a pure service platform where they rely on the hardware built and owned by others. Sure they could still make consoles but it would be about offering gamepass to a greater user base.

Whether they can do this is unknown and would require far more games as i mentioned.
Now if Sony decided to do this while ms was finding their feet then as i mentioned their plans could be scuppered.

[pinkcrocodile75]

@nagura - I think you're dead wrong about Japan. While it is nice to have a couple of Japanese games to cater to the niche market, more money is made outside of Japanese studios.

Japan while great is no where near the paradigm it once was. They haven't been the paradigm for a VERY long time.

[PUBG]

As long as there is always an option to download, like with Game Pass, or just digital downloads through a single purchase, I'm happy. Streaming is just not something that I want to do with low resolution visuals, artifacting, latency, and massive bandwidth usage, more than 4x what YouTube and Netflix require. Streaming just doesn't make sense, and I suspect that enthusiast gamers will always be given the option to download for the best visual and sound quality.

[Godmars290]

@sd11:
One issue with MS streaming, as apposed to porting, their games to other brand consoles is that because they're MS there will be subscription fees. Likely one for online/multiplayer access, then another for library access. That's if the two aren't combined into a combined tier system based on number of games per month.

Another is that I could Sony outright refusing for the same reason they don't do EA pass: they have their own version of a game streaming service. Nintendo doing the same.

Not that PCs would be enough, or that MS could either keep making physical boxes, or farm that out to 3rd parties who then end up paying MS for something they've only lost money on in the past. Spectacularly lost money on.

[MuddyWaters]

"Another is that I could Sony outright refusing for the same reason they don't do EA pass: they have their own version of a game streaming service."

GamePass and Origin are not streaming services though and each will now have new titles, Origin Premiere will even have access to new titles before they launch. So why refuse them unless they are not confident in their own service? To me that just shows they really don't care about the consumers by not allowing them to choose.

[Godmars290]

"just shows they really don't care about the consumers by not allowing them to choose."

No, they don't want them to choose. Sony want consumers to pay for *THEIR* product, not be a platform to pay for MS's "products" or rather services. Which is the other issue.

Where the likes of MS and EA are moving to make games services as apposed to products effects said former products on a fundamental level which has already been seen in the story quality of titles like Halo and COD. The instance of the two companies that SP gaming is done, coupled with their inability to make or provide SP games. How the structure of SP games have been effected - ruined - with the rise of DLC and MTs.

[subtenko]

PlayStation is best at doing that...... and they give fans more what they want than Microsoft. All xbox does it not utilize it money correctly and doesnt have as much passion

[YEP414]

Netflix is popular cause of the main third party shows they show and old season! Netflix own content is weak!! Stop it!! Nothing Netflix produce have ever been a Hollywood hit!

[Sharky231]

@kun_ADR

What makes you think Sony won’t change and turn PS Now into a hybrid streaming/game pass model? They could probably do it with the push of a button.

[PUBG]

What's scary, is that most people in thread don't understand the difference between a streaming service like PS Now and a download service like Game Pass.

[Larrysweet]

Its gamings future sadly ea in it now rest will follow

[Godmars290]

Its only the future because the likes of MS and EA are insisting that it is.

[Prince_TFK]

Is that a bad thing? The more people can enjoy the better in my opinion.

[81BX]

Yes it's a bad thing. It draws away from... who sold more consoles? Argument

[DarkVoyager]

“Microsoft is trying to become the 'Netflix of Gaming,' putting it on the path to $1 trillion“

They were also going after Sony to take over the living room. We all see how that went.

[sagapo]

You should be glad there is competition for Sony, or vice versa. If Sony had a monopoly it would be bad for us gamers. Remember when MS had the PC market in it’s hands (windows, internet explorer,...) think about it. MS introduced paying for online gaming, sony fans laughed, but guess what Sony eventually did. They added the bonus of free games however wich MS had to do as well. This is why competition is good. MS made some slip ups over the last years but you better hope they come back to keep the competition going.

[DarkVoyager]

“MS made some slip ups over the last years but you better hope they come back to keep the competition going.“

I like some competition but Sony did just fine before Microsoft even enetered the console business.

[FinalFantasyFanatic]

If Microsoft ever leaves the gaming sector, I hope some other hardware manufacturer steps up, god knows who would though.

*Glances at SEGA/Atari*

Yeah, probably not.

[NeoGamer232]

First, you probably didn't read the article and just threw this comment out as a fanboy.

Second, MS has not taken over the living room, but they are still in gaming and their gaming future is improving so they are at the very least still standing. If it wasn't for their commercial missteps to start the generation they would be standing even better.

Third, gaming is changing massively over time. In 2005 consoles were questioned about their online focus. Again in 2013 with Xbox One. But, the reality is that more and more gaming is becoming digital. Physical sales of games are declining, digital sales are skyrocketing, and streaming is getting better and better. As things change games are becoming more platform agnostic. More and more consoles are starting not to make any sense. With families having it tougher and tougher to meet ends, $200-$400 consoles don't make as much sense, and being able to stream from a device most people already have like laptops, tablets, and phones just makes sense. And more and more TV connectivity to these devices will make it so that you won't need a device in the living room.

With all that said I think consoles will still exist, but they will just be computers connected in the living room, for people that have extra cash and want to spend it on the device as a preference not a requirement.

[Godmars290]

@sagapo:
"MS introduced paying for online gaming, sony fans laughed, but guess what Sony eventually did."

Followed suit with the Xbox fanbase only praising ALL ACCESS from Netflix to Facebook to the 360 requiring an additional paid sub. And even then Sony was never as restrictive.

In the wake of a monopoly, earned by delivering product, Sony offered a multiplatform entertainment system in the PS3 which was half as cheap as a standalone BR players at the time. They also tried to screw over/control devs with an overly complex OS.

In the wake of the resultant mess, making themselves believe they'd "earned" a monopoly with the 360, MS tried to impose DRM and Kinect. Now tough the most powerful system while doing nothing with it.

There's competition and then there's competition.

[PETE1985]

After seeing EA conference they are also moving in this direction.
This is how the gaming industry is going to shift in my opinion.

[MatrixxGT]

I am no expert but I have a strong feeling that when gaming shifts from local hardware and becomes reliant on a excellent internet connection. The industry will finally see how horrible this will be.

[ILostMyMind]

Why they don't put their games on PlayStation?

[Jmanzare]

Isn't Sony the only one with a video game streaming service? I don't get this

[princejb134]

Is MS though. I'm sure they'll over charge

[Nyxus]

I just hope they will also keep the option of buying a traditional console with physical media.

[Gazondaily]

Yeah same here

[starchild]

Me too. I'm all for options, but I do not want to see all gaming go to a subscription model.

[NeoGamer232]

I do not mind having a digital only model.

Things are changing though. 5G may make people move away from home networks just like cellular phones have made a lot of people move away from physical phones lines.

The only thing that needs resolution is having a 5G mesh over the entire planet making wireless available to everyone fast, reliable, and low cost.

[LordJamar]

I think they will. I dont know why people think we cant have both options

[Parasyte]

If they do go the "Netflix" route, I could very easily see them releasing a console without a disc drive, and replace it with a large storage drive.

[Nyxus]

Well if they do that the console won't be for me anymore. Not being able to play physical media is pretty much the only real dealbreaker a console can have for me.

[XiNatsuDragnel]

Basically confirming suspicions, and mine as well. Also, Microsoft is a software company, not a hardware company. So I see becoming a service for every platform in the next 5-10 yr or so.

[ElementX]

Decades ago Sony was a hardware company not a software company. Your argument can be used both ways.

[Thatguy-310]

what are you talking about? lmao

[ElementX]

I'm saying MS can be both software and hardware, take Sony for example. It doesn't take a genius to figure out what I meant.

[XiNatsuDragnel]

Dude Sony's roots were always hardware so argument invalid lal

[The Wood]

What element is saying is that Sony were a hardware company that now excel in software. . So the same rule in opposite can work for Microsoft. . Problem is ms as a software company should be way more competent but they have failed miserably this gen. . Less output than the previous gen isn't any kind of progression no matter what metric others (Not you element) will use to justify ms's weak output. They came good on the 1x hardware though but flopped by relying so heavily on multiplats. 2 or 3 retail games in a year in year 5 is pretty #### if you ask me.

[Gh05t]

MS makes one of the best portable pieces of hardware available that no other company comes close to it's power and convienence. The Surface is amazing for my techs out in the field. It's small and has an i7 CPU and 16GB ram in a tablet form factor. Not to mention I don't have to pay extra money to develop and release our own software on it like our old iPads.

MS makes plenty of good hardware, it's just that it usually benefits enterprise customers more than private because the price tags are usually pretty high and the use cases are better for work.

If only they would make the i7 version of the surface with a mobile network antenna. Right now it's only available in i5 version so I have to use hotspots for our needs.

[monkey602]

Have you seen the Surface Studio? It is gorgeous ! I really want one and I'm thinking genuinely of taking the hit and getting it

[Gh05t]

I have. It's very slick. I need the portability since my people are out and about most the day and when they come back to the office they just plug into the dock and have a two monitor setup. I am pretty close to removing their desktop computers for anyone but our admin staff and just using the Surfaces.

[KwietStorm_BLM]

Microsoft has been making hardware and software for years, as has Sony.

[XiNatsuDragnel]

Problem is want to become netflix of gaming = service for all plats

[ILostMyMind]

For PlayStation?

[Antnee534]

Gamepass is subpar so far, but only because of the selection of games. Once ms has some more xbox exclusive games for it that will add value. The 3rd party selection needs to up its side to most games are 5 year pld sports games and then shitty 3rd party games as well. When they get the witcher 3, fallout 4, and stuff like that will be much better but its a good start

[tontontam0]

What? ms has exclusive games?

Which also means that if sony decided to copy gamepass ms will now lose again.

[Antnee534]

Sony and gamepass if treated like ms where all the sony only games came along with it would harm sony because that is wasted sales when you can not have the pass and make 60 a pop for each sony only game. The game pass is good for ms because they need all they can get to make the xbox look appealing to people so they buy it.

[Lennoxb63]

That would actually hurt Sony. Nobody is going to pay the full price for their SP games anymore. They'll just play through the campaign and unsubscribe. With MS being MP mainly, this helps them. Seeing as MP games have DLC and MTs as well. MS aren't as worried about the initial cost.

[ApocalypseShadow]

In order to become the Netflix of gaming, you must provide more quality content above questionable shovelware. At least with Netflix, for $10 or so a month, the amount of big name movies,television shows and Netflix originals outweigh the filler of average titles of movies and television shows. You're also not expected to buy anything other than the subscription. And, no commercials or outside advertising.

Microsoft would probably expect you to pay an entrance fee like Xbox live, pay for the subscription, offer to pay for games, pay for dlc and micro transactions and you would have to deal with being advertised to by other parties most aren't interested in like mountain dew and doritos.

It would also have to be streamed as most games are too large to be downloaded in most data plans,slow internet areas and small countries. It's why Netflix works because of smaller content sizes and why game streaming services have yet to take off.

[fonger08]

As a business, I'm sure all the major game developers/publishers would love to be a streaming or games as a service. It cuts out expensive hardware development, brick & mortar cuts, logistics, and other costs associated with generational hardware/physical software. Sony didn't invest $400million by accident on Gaiki and Microsoft hasn't been pushing Gamepass because they believe it to be fad. Subscription gaming and fees are where these companies make their profits and so long as these are publicly traded companies, the push for better margins will always be a focus.

[DigitalRaptor]

Will this happen before or after they've sold 200 million Xbox One consoles? https://www.gamesindustry.b...

[OB1Biker]

https://www.vg247.com/2013/...

[morganfell]

They aimed? Did they have their eyes open when they sighted down that barrel?

[The_Jackel]

ahahaha hasnt even done 1/4 of that, 30-33mil is nowhere near it not to mention what ob1biker posted. talk bout ms being cocky 😂

[PowerOfTheCloud]

Lol an oldie but goldie @digital raptor. Back then sales mattered to them. But now that x1 did poorly they switched to using smoke and mirror numbers like mau and such where they can hide behind.

[Smokehouse]

Yup. They have their services,

[TheOttomatic91]

Is it?

[TocaCannaBowl]

why are people praising this?.. xbox is dying yet u all are praising the route they are taking ? wtf ?

[TocaCannaBowl]

????

[SilverDemon]

As you said, xbox is dying anyway so why not turn it into something else instead of completely leaving the gaming industry

[Prince_TFK]

Xbox is not dying. 30+ millions consoles sold is not what I call “dying”. Now the PS Vita and the Wii U on the other hand...

[PowerOfTheCloud]

You have to be more specific. Xbox as a console "could" be dying, but could live on as a service for many devices. But even then ms could still produce a dedicated xbox console as a fanservice.

It may not be dead but xbox lacks any incentive to buy one.

[inxine]

i get that, but we are not there yet. streaming movies is one thing, streaming games with real time input another. they shouldnt be focusing on that atm.

[Smokehouse]

good article, I enjoyed it. He might be putting a little too much faith in “azure” but who knows, maybe they pulled it off and e3 will kick crackdown back to its original vision. Game pass is the Netflix of gaming already.

[Melankolis]

Maybe in the future Sony's Playstation can run Xbox streaming service.

[bartender64]

Yeah, why not? Windows pc's are already running PlayStation services.

[masterfox]

lol Netflix of gaming...*sees MS exclusives*.... rest in peace you so called Netflix of gaming wannabe :D

[Prince_TFK]

Good then that it include both multiplatform and exclusives.

[Bruh]

They're pretty much the frontrunners of these kinds of services in particular to gaming. Problem is when you lack original content on your end, you have no weight if say Sony comes into the market and does the same thing. EA and Ubisoft will most likely have their own versions and MSFT and Sony will probably have similar set ups, with similar titles with really the 1st party line-up being the differentiator

[Visceral89]

Once Xbox starts putting quality exclusives on game pass, expect the price to go up to 20$ a month

[snkiworld]

quality exclusives LOL

[shinoff2183]

I hope they fail. All this will do is usher in all digital. I'm a gamer that still prefers my gaming media on disc, or carts whatever they may be, just not digital. Way back in the day I had a bunch of Rome and music on a 80 gig hard drive. It failed and I lost everything on it. I know you can re download games yiu bought but what happens when those stores are no longer available. My disc will hold up for quite some time. So what if I got to get up off my but and switch the disc

[snkiworld]

But Microsoft becoming 'Curse of Gaming'

[Uglyday]

Netflix has “original content”

MS doesn’t.

Netflix has a great assortment of Japanese anime and tv shows/movies.

MS couldn’t find Japan on a map.

[TheColbertinator]

Azure is the savior of gaming

[shinoff2183]

Sarcasm?
If not then savior of what. Gaming is doing fine well atleast with ps4 and switch

[Apex13]

Subscription services are now the business models of the future in all industries. It's a smart move but only if you do it well enough and not like PS Now

[Tross]

The gaming business for MS is seeing a shift away from hardware. Fixed.

[Goukira]

You do realise that game pass is not a streaming service and I don't think that Microsoft will change that concept. On the other hand I don't understand how everyone is saying that ps now bad latency. For me and I think the majority it works just fine and I'm at the "lower" end of internet speeds with just an 30mbit connection and I think their game library is really good. And how can people say that a slow internet connection is a disadvantage for ps now but not for game pass? You have do download the games what takes ages on a slow connection and then there is the space issue on your hard drive. And a major advantage from ps now is that you don't even need a ps 4 for their complete library which is possible because they are streaming it. Game pass with their few play anywhere titles just don't cut it for me.

[Kokyu]

Big bag of nope.

[xenz]

Streaming will never become the norm as long as people around the world have shitty connections and that they are removing games from the service as they add more.

[JesusBuiltmyHotrod]

BWHAHAHAHA.

[spambot0815]

don't use netfix or similar services because i prefere to pay per content not pay per provider.

[Sirk7x]

"Google, Amazon and Microsoft are all working on cloud-based, streaming video game platforms designed to compete with PlayStation and Xbox, and these could launch before the end of the decade," he wrote. "These services would expand the addressable market by at least 4x and would be available on all screens including TVs, laptops, tablets and smartphones."
Everyone downvoted me to hell when I said this was the future of gaming a few days ago. Good luck to any company trying to compete with Amazon and Google in any market, anywhere.

[obidanshinobi]

Erm, but Netflix is bleeding money out of it's arse.
A company's valuation is not based on the profit it makes.

[Sirk7x]

Netflix isn't Microsoft, Google or Amazon though. Different beasts. Also, the video game industry is bigger than the movie and music industries now.

[thehitman1398]

Yeah, how well is that working for micro do far ??

You want to compare to Netflix, but they have a TON of original content. Dont really see that from micros system or anytime soon at all.

[LordJamar]

Look some one has to pull the plug on this and not be scared to do it and Microsoft seems like it want to be the front runner for it i say go right ahead just make it the best it can be and be committed to do it don't be scared and back out or do it half way go full in Microsoft and have no regrets

[jznrpg]

Screw your plans MS we knew this all along .

[Sirk7x]

It's not just them man. Once Amazon and Google decide to push harder, it's gonna turn the industry on its head. Amazon owns Twitch, Google owns Android. These platforms are very popular, and once the technology is there, very shortly, they're gonna push hard against Sony/Microsoft/Nintendo to create new markets and direct where they go.

[jmc8888]

Stock valuation is meaningless. That could go to 200 billion easily (if not lower) when (not if) the next 2008 crisis happens.

Valuation is not money in the bank. Not for Microsoft and not for stockholders.

This goes for any company on any stock market in the world.

As for adding a subscription service, that aids in adding consistent cash flow, which is definitely positive for the company. Of course digital downloading the games is superior to any future streaming option.

Look at it from that angle, not stock valuation angle. Because what a stock is currently 'worth' is only in the moment, and the value to YOU is whatever you actually sell it for.

As for the consumer, the value in subscription is less then a regular digital download license which is less then physical media. Subscription, whether digitally downloaded or streaming is another step back for consumers in that as soon as they stop paying the subscription, they lose access to the games. Regular digital download license or physical media that doesn't happen.

Overall the value is like this from worst to best.
1. Cloud subscription
2. Digital download subscription
3. Digital download purchase
4. Physical media.

4 is best, 3 is acceptable. 1 and 2 are pretty horrible. 1 is the absolute worst because you can't play without a connection, and even when you can, there's limitations like latency that impact gameplay.

That doesn't mean 1 and 2 doesn't have some value, as for some it could save some people a ton of money in exchange for giving up all ownership rights. But those are people who generally would buy a ton of $60 games, and all of them happen to be on that service, and they never go back to them or if they bought physical media... ever sold them. But if that's the case, these people want #2, not #1. #1 really doesn't have any benefits.

The only future possible benefit of #1, is buying a $100 box that includes a controller and you don't have to buy a console or own any other hardware.

[Psychotica]

Netflix, the movie streaming service that never has the movie you want to see..

[Flewid638]

But are the movies on Netflix good? They are now.

Give me a streaming service where the games are good. Right now, good games (in abundance) don't exist on their platform. I'll stick with PlayStation till there's a reason to adopt to another platform, since Sony's is the only one where the games are actually worth it.

[DEEBO]

Stock buying time
I think their stock is at 101.00 but soon if everything goes right they can be up there with Netflix or Google/alphabet.