Article : Making Sense of Xbox as a Service on Other Devices

I was traveling this week which allowed me less than time than usual to be up to date on all things gaming industry related. This morning, while getting caught up, I saw nearly endless posts, opinions, videos, arguments, and worse relating to Xbox Game Pass potentially coming to the Nintendo Switch. Many of these posts are misguided and/or misinformed so I wanted to take a moment to try and help clear up some of the confusion.

Let me be clear, this is not an opinion article. I will not be discussing my personal thoughts on Xbox’s direction nor will I try to convince you to feel a certain way. I will be merely attempting to explain the technology and how it will function at a base level. Because one thing has become exceedingly clear; people are making this out to be far more complicated than it actually is.

I’ll break this down into three categories because that’s essentially what we’re dealing with. Those are Xbox Live, Xbox Game Pass, and Project XCloud. All three are critical pieces to the puzzle and each holds a significant role in Xbox’s future direction. Understanding how they tie together is important in this evolving industry. Let’s get to it.

Xbox Live is the most well known component having been in place since 2002 and familiar to gamers around the world. In fact, a little over a year ago I covered the history of Xbox Live and its significance to the industry. Gamers typically associate Xbox Live with online gaming on Xbox and Windows 10 devices. However, the key distinction to understand is that Xbox Live is an online infrastructure. It is not tied to a device. For example, when you use the Xbox App on your phone, you sign into Xbox Live using your Gamertag just as you would at home on your console. Xbox Live houses your online Xbox profile, game saves, friends list, captures, digital library licenses, and more.

A good example to use when attempting to understand how Xbox Live functions today is an Xbox first party title on your PC. When playing Gears of War 4 on your PC, you log into Xbox Live with your Gamertag, unlock achievements, access your friends list, chat in a party, etc… As far as Xbox Live is concerned, it matters not that you are on a PC. You are merely playing a game while connected to Xbox Live. It is no different, conceptually speaking, from logging into Fortnite on different platforms. Fortnite is run by Epic and when you login using your Epic account, your profile, skins, and passes are all there waiting for you. Whether you login to Fortnite on the Xbox or your Iphone matters not – you are simply logging into your Epic account.

Simple right? So now let’s look at the next step in the process, Xbox Game Pass.
Xbox Game Pass, in its simplest descriptor, is merely an extension of your Xbox Live profile. Remember how I said your game saves, captures, digital library and more are tied to your Live profile? Game Pass is merely an additional, paid feature that is added to that profile. So in addition to having the functionality of Xbox Live, you unlock the digital licenses for the games in the Xbox Game Pass portfolio. When you buy a game digitally today on Xbox Live, it simply grants your profile a license to download that game and play it to your heart’s content. Game Pass is merely a paid bundle of digital licenses that you are granted access too as long as you pay for the subscription. It’s truly that straightforward.

Alright, so that leads to the obvious question which is:  “I understand Live simply being an online service that houses my online profile, licenses, and permissions, but I still don’t understand how a Switch or Iphone could run Halo like an Xbox One console!” Say hello to the third pillar of this structure, XCloud.

XCloud is where things get very interesting and why I believe Phil Spencer and team felt the need to mention it at E3 last year. While I won’t claim to understand the deep, technical details of how it’s working, beyond Microsoft hiring wizards again, I can explain to you how it functions at a broad enough level to make sense of all of this.

For context, let’s start from the top again. I want to play Forza Horizon 4. I turn on my Xbox, log into Xbox Live with my Gamertag, and download it due to being an Xbox Game Pass subscriber. Now, my work tells me that I have to be in Los Angeles next week and I think “I wish I could continue playing Horizon 4 on my other devices!” I hop on the plane, pull out my Switch, open my Xbox App, log in with my Gamertag, and thus authenticate my Xbox Live profile and its associated licenses. But the challenge then becomes, how does the Switch hardware run Forza Horizon 4? Ahh, there it is. The million dollar question. To which the answer is, Project XCloud.

Project XCloud is the engineering marvel that will process game calculations on the Microsoft Azure server infrastructure, thus handling the vast majority of the calculations for a game that would typically be processed by the CPU and GPU of a local device. This means that a device like the Switch or an Iphone would only need to rely on their hardware for a base layer of processing and would not need to contain CPUs nor GPUs capable of running the games themselves. As long as you are logged into Xbox Live and thus connected to the Azure server infrastructure, XCloud will handle the majority of game processing thus opening the doors for your Xbox games to be played on third party devices.

As I said at the start, conceptually it’s really not that difficult to comprehend. Billions of people, use thousands of services every day, across billions of different devices. It doesn’t matter if you log into your Xbox, PC, phone, or tablet to watch Netflix. You are authenticated to a server and the data for your profile is passed to that device. While gaming is far more complex, the fundamental concept is the same (I apologize for making some engineers cringe at that statement). Xbox Live is the platform, Game Pass is merely a license, and XCloud will handle the processing power needed to run the games. What device you use to play those games matters not.

This is where skepticism begins to arise and in some cases rightly so. However, keep in mind that XCloud has been in development for some time and is already playable today. Phil Spencer and internal teams at Xbox are already using XCloud and Phil has openly discussed it. Additionally, if you’ve been paying attention, Google is actively testing similar functionality which they’ve titled Project Stream. Late last year a select group of people were granted access to play Assassin’s Creed Odyssey by simply using their Chrome Browser. We’ve been conditioned by the traditional console experience for decades and thus our minds immediately ask “How is that possible? That is a huge, AAA game!“. However, conceptually speaking, it’s similar to XCloud. Google is offloading the game’s calculations, typically processed by a local device’s CPU and GPU, to their server infrastructure. And by all accounts, from the people I’ve spoken with who partook in the test and the articles written on it, it worked surprisingly well.

Now, this does bring to light a whole host of additional questions for Xbox as a brand. The one I see most often is “Well then what’s the point of owning an Xbox console?“. Again, Microsoft has been very clear about this as well. If you want to play Xbox games on a PC, go right ahead. You’re still paying for the games and service so it matters not to Microsoft as the revenue stream is the same. However, they also understand that, at least for the foreseeable future and in many markets worldwide, the want/need for a physical box is still present. And that’s why Xbox consoles will continue to be produced and keep in mind, they have already stated that they will have the best console hardware next generation. So if you’re like me, and love the home console experience, that will still be available to you as well. In the end, it’s about giving the choice back to the consumer.

“The same team that delivered unprecedented performance with Xbox One X is deep into architecting the next Xbox consoles, where we will once again deliver on our commitment to set the benchmark for console gaming” – Phil Spencer during Xbox’s E3 Press Conference in June of 2018

When Xbox moved away from talking about consoles sold a few years ago, the above is why. Its relevance is no longer as significant as it once was in the industry. Console hardware is traditionally not profitable to begin with; it’s the games and accessories which account for a “console’s” revenue. While the PS4 has dominated this generation, and sold over 94 million units to date, it is not the units sold that generates revenue for Sony. It’s the money spent on games, PSN Plus, and PS Now that have led to over $13 billion in annual revenue on digital services. And despite Microsoft being far behind in the total number of consoles sold this generation, it hasn’t prevented Xbox from continually growing in profitability year over year. Microsoft is merely taking their offerings to more devices rather than being locked to a single box.

The industry is evolving just as it has done for decades. We simply need our thinking of the traditional console experience to evolve with it.