Amazon and Microsoft cloud gaming plans target different players
Microsoft will test ad-supported Xbox streaming, while Amazon brings Luna to Prime Video in a push for casual gamers.
By Sarah Jenkins · Chief Macro Economics Correspondent
· 3 min read
Amazon and Microsoft cloud gaming plans are shifting as the two technology groups try to broaden demand for game streaming, a format still constrained by unreliable internet performance and latency. Microsoft’s Xbox division said Thursday it will test an advertising-supported way for users to stream games they already own, while Amazon said it will add its Luna cloud gaming service to Prime Video, which is included in Prime subscriptions costing $14.99 a month.
The moves point to different commercial bets in a market where cloud infrastructure strength has not translated into mass gaming adoption. Microsoft is testing whether advertising can reduce the cost of access for players, while Amazon is putting Luna in front of Prime Video users and focusing on casual play rather than direct competition with console makers.
What are Amazon and Microsoft changing in cloud gaming?
Microsoft said gamers in the Xbox Insider Program will be able to join its test, which has a one-hour session limit and applies to titles already in a user’s library. Xbox said in a blog post that its aim is to give more people “more affordable ways to play.”
Xbox also said advertising has been part of games for decades, including in-game placements and free-to-play models, but added that it has not always been designed with the player in mind. The company has not introduced an advertising tier for its Game Pass subscription service.
Amazon said Luna will be added to Prime Video, giving the service more prominent placement than it had as a standalone website. Luna lets users play on smartphones and standard computers without buying consoles or dedicated gaming PCs.
What is cloud gaming?
Cloud gaming runs games on remote servers and streams the video and controls to a user’s device, similar in principle to video streaming but with real-time input from the player. The model can lower the need for expensive hardware, but network delays can disrupt play because games require fast response times.
That latency issue has limited broader adoption. Google introduced its Stadia cloud gaming service in 2019 and discontinued it in 2023, underscoring the difficulty of converting cloud delivery into a durable consumer gaming business.
Microsoft introduced Game Pass in 2017 and bought Activision Blizzard, the publisher of Call of Duty, for $75.4 billion in 2023. Xbox trails Nintendo and Sony in console sales, according to CNBC, and the unit has been trying to return to growth and improve margins.
Since Asha Sharma became Xbox CEO in February after Phil Spencer, CNBC reported that she has appointed new leaders, promoted a forthcoming console, pushed for exclusive games and cut subscription prices. This month, she announced a 20% reduction in force and said Xbox would spin out four development studios.
Amazon entered cloud gaming in 2020 during the Covid pandemic, when gaming demand was rising as people spent more time at home. Its gaming unit has struggled to produce major hits, seen executive turnover and gone through several rounds of layoffs, CNBC reported. Amazon has also shut down or offloaded titles including the online game “New World” and a planned “Lord of the Rings” project.
Jeff Gattis, Amazon’s gaming head, told CNBC that the company is seeking casual players with party games and recognizable franchises such as “Harry Potter” and “Tomb Raider.” He said Amazon is not trying to draw hardcore gamers away from consoles.
Gattis said Luna has “millions” of users in the U.S. and 13 other countries, and that Amazon wants to reach 10 million to 20 million users “as quickly as we can.” He also said Amazon is working to address a consumer awareness gap around its gaming strategy.
This story draws on original reporting from CNBC.
