Microsoft Corp. (MSFT) could see a major boost from a new business division focused on getting a whopping 2 billion gamers around the world to use its cloud service. Last week, The Verge reported that the Redmond, Washington-based tech titan is launching an entirely new gaming cloud division, gearing up for a future where consoles and gaming look very different from today. (See also: Microsoft to Gain on New Enterprise Buying: Bulls.)
Microsoft's new "Netflix for video games" would offer users access to games from a variety of developers on a subscription basis and is intended to lure developers and game publishers to use Microsoft's cloud services, particularly as games become more connected across devices for their multiplayer experiences. Microsoft Azure, which competes against the likes of Amazon.com Inc.'s (AMZN) Amazon Web Services (AWS) and Alphabet Inc.'s (GOOG) Google Cloud, is already used by video game publishers at Microsoft and others including Ubisoft across PC, Xbox, PSW and mobile.
While in the past, video games where available on only one console, forcing players to choose to buy specific hardware to have access to exclusive titles, the cloud has opened up an entirely new opportunity for developers to potentially stream content to PCs, mobile devices and consoles.
Taking on Nintendo and Sony
"We're looking at ways to make that content available to anyone no matter what device they're on," said Microsoft's gaming cloud division Chief Kareem Choudhry in an interview with The Verge. He added that the company's goal is to reach every one of the 2 billions gamers worldwide.
Despite major strides by cloud providers to propel this shift in the gaming industry forward, the success of these initiatives will rest partially upon companies like Nintendo and Sony. Nintendo has only recently started delivering games to platforms beyond its own consoles, and only with Apple Inc.'s (AAPL) iPhones and Google's Android devices.
That being said, if Microsoft adds its games with others made by third-party developers, it could present a well-rounded lineup of titles with or without Nintendo and Sony. While the company did not provide a timeline for the game-streaming service, Choudhry suggested that Microsoft is "spending a lot of time thinking about that space," including making a business model that's attractive to third parties.
On Monday, Amazon announced a new cloud service called GameOn, intended to reel in game developers with the option to add more features such as competitions in games, along with the ability to send giveaways through easy integration with its e-commerce marketplace. (See also: Amazon Eclipses Microsoft in Market Value: A 1st.)