Microsoft and the Xbox Scarlett need to focus on mobile gaming to succeed

Microsoft lost a lot of ground with the Xbox One. Now gearing up for this year’s predicted reveal of the next Xbox, codenamed the Xbox Scarlett, the company has a lot to do if it wants to get back on equal footing with Sony. The PS5 is undoubtedly the most highly anticipated upcoming console at this point, with Sony having sold 91.6 million PS4 units and enjoying a much larger audience. However, Microsoft’s revealed plans for the next Xbox are highly interesting, and the push towards mobile gaming could see the company completely revitalize the Xbox brand, offering something that none of its competitors can.

Xbox boss Phil Spencer stated that his team is looking to the cloud for the Xbox Scarlett, as evidenced by the reveal of its xCloud service. Announced last October, the xCloud allows gamers to use an Xbox controller with their mobile devices, streaming console-quality games on the small screen. It’s an ambitious project, one that Microsoft’s VP for cloud gaming Kareem Choudhry called a “multi-faceted, complex challenge.”

“Unlike other forms of digital entertainment, games are interactive experiences that dynamically change based on player input,” Choudhry wrote in a blog post. “Delivering a high-quality experience across a variety of devices must account for different obstacles, such as low-latency video streamed remotely, and support a large, multi-user network. In addition to solving latency, other important considerations are supporting the graphical fidelity and framerates that preserve the artist’s original intentions, and the type of input a player has available.”

Microsoft is in a unique position to be able to tackle these challenges. With its Azure platform, it offers a complete cloud service and infrastructure with over 100 facilities worldwide in 54 regions, making it available in over 140 countries. North America, Europe, and Asia are widely covered, with a partnership between Microsoft and 21Vianet also bringing Azure to China. The Xbox has never been able to crack the Eastern market, which remains the most lucrative in the world. However, with mobile gaming at the forefront of the Eastern gaming industry’s profits thanks to giant publishers like NetEase and Tencent, Microsoft’s making the right moves to increase its visibility in the region.

Mobile rules, console drools

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It’s not difficult to see why Microsoft is looking in this direction. Insights published by games and esports analyst company New Zoo projected that 2018 would see mobile games achieve 51 percent of gaming’s global market, generating $70.3 billion with a whopping 25.5 percent year over year growth. Comparatively, console gaming was projected to generate a much lower $34.6 billion for 25 percent of the global market share, and with just 4.1 percent growth in the same time period.

This might not be encouraging news for many gamers. As we’ve seen with the recent announcements of Diablo Immortal and Alien Blackout, there is often a strong backlash when a company reveals its commitment to mobile. Heavy microtransactions and ‘pay-to-win’ models make mobile appear unattractive, despite the accessibility it affords the player. Many view mobile games as “lesser” than their console or PC peers, making a console with a focus on mobile a big gamble.

But the issue with mobile gaming as a platform has been the dilution of existing games franchises, with publishers watering down popular series in an often cynical, microtransaction-laden fashion. The vast majority of mobile games simply aren’t very good, and it’s this lack of quality that fuels concerns.

However, for all the complaints about mobile gaming, the numbers don’t lie. It’s more successful than any other platform right now, offering unrivaled accessibility and fewer overheads to maximize profits. In its own way, the Nintendo Switch has also symbolized what a shift towards portability can do. People want to play games on the go and not be tethered to their TVs. Nintendo recognized this, and now Microsoft wants a piece of that pie, too.

It’s all in the xCloud

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By preparing xCloud and readying itself for game streaming on mobile devices, Microsoft is opening up its potential userbase. Growth for console gaming is slowing while mobile gaming is booming, and the business model of consoles attracting buyers by way of exclusive purchases is dated. We live in an era of cross-platform play, where Sony was forced by public demand to allow PS4 owners to play their online games alongside Xbox One and Nintendo Switch owners. While console exclusivity has been a key selling point since the beginning of the gaming industry, inclusivity seems to be the future.

“When you think of any other form of media, the idea that it’s locked to just one device is just totally absent,” Spencer explains in the xCloud announcement video. “I want to be the center of my world, and I want the devices and services around me to be available wherever I want them to be.”

Azure allows Microsoft to build an ecosystem with the next Xbox that encompasses mobile gaming. Nintendo may have struck gold with its embracing of the platform, but aside from compatibility between games like Pokemon Let’s Go and Pokemon Go, the Switch and mobile remain separate entities. If Xbox can do as Spencer says and bring major games to mobile via xCloud, then the issue of quality would be negated by way of making blockbuster titles available to play on the latest iOS or Android phone.

Future-proofing the Xbox

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The concluding chapters of the Xbox One’s life cycle have focused on positioning the Xbox brand for its future. Major exclusive titles such as Gears 5 and Halo Infinite have already been announced for Xbox Game Pass, overlooking the huge profits Microsoft could drive in from game sales by way of increasing subscription numbers. Then there’s Xbox Play Anywhere, allowing players to download exclusive games on both Xbox One and Windows 10. This has led to PC players being able to play games like Forza Horizon 4 and Sea of Thieves, reducing the necessity of the Xbox One, but setting up the ecosystem that Microsoft is gunning for.

This ecosystem is something that the PS4 and Nintendo can’t provide, and Microsoft is clearly going all-in on it. With the Xbox One serving as a test platform for its next-gen experiment, it’s banking a lot on gamers embracing the idea of being able to take their console games anywhere. The Xbox One lost the company a lot of ground, but in preparing itself for a bold outreach into mobile and game-streaming, Microsoft is future-proofing the Xbox brand. When it comes to the next-gen, the “traditional” PS5 that Sony will reportedly unveil might look outdated before it has even launched.