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Microsoft Xbox shines at the E3 2021 conference

June 16, 2021

Greg Sigel

VP – Partnerships

The virtual version of the Electronic Entertainment Exhibition, better known as E3, kicked off earlier over the weekend with some of the world’s largest video game and console creators unveiling new game titles and other updates. This is the first E3 since 2019 after the coronavirus pandemic cancelled last year’s conference, usually held at the Los Angeles Convention Center. The 2022 conference is slated to return to the physical settings, according to reports. A series of curated live-streamed videos coordinated by the Entertainment Software Association continued introducing new line-ups from the most popular game publishers.

Microsoft’s Xbox division and Bethesda Softworks, part of ZeniMax Media acquired by Microsoft earlier this year for $7.5 billion,  started off the event, showing a trailer for the much-anticipated space RPG “Starfield” and a new look at gameplay from “Halo Infinite.” Its showcase with Bethesda leaned into exclusive titles like “Starfield,” “Halo Infinite”, and a new shooter game called “Redfall.”

Earlier this week, Xbox announced its Game Pass streaming service would be available directly through smart TVs and phones. Xbox’s cloud gaming service on the browser will open up to all Xbox Game Pass Ultimate members, supported by Google Chrome, Apple’s Safari and Microsoft’s Edge browsers, making Xbox a line of service beyond just the console. Microsoft is also building its own game streaming device and working with T.V. manufacturers to embed Xbox Game Pass into smart TVs with no extra hardware except a controller. In addition, the company was said to be determining new subscription tiers for Xbox Game Pass on the lines of Google Stadia and Amazon Luna.

Cloud gaming experience has thus far been constrained with limited bandwidth. But that is about to change with the rollout of 5G services in the U.S. and the rest of the world. Newzoo is forecasting that the global value of the cloud gaming market will more than double from US$633m in 2020 to US$1.45 billion by 2021 as consumers spend more on subscription fees and buying new games and in-game content. The company’s Global Cloud Gaming Report also forecasts that that value will more than triple again by 2023 to exceed US$5 billion as device and network infrastructure continue to improve. Figures from IHS Markit confirm the trend, predicting that while cloud gaming service subscriptions hit US$234m in 2018, they will expand to be worth US$1.5 billion by 2023.

The fact that gamers can jump straight into playing new games almost immediately without having to wait for a download offers a faster onboarding experience which also should help cloud gaming platform providers and 5G operators maximize their revenue. So too will flexible billing arrangements which give telcos the option of charging cloud gaming subscription fees to players’ mobile phone accounts or pre-paid balances — handy for younger people and those in emerging economies less likely to own cards and pay for digital services with traditional means.

The availability of 5G matters to cloud gaming because the single fastest-growing category of the gaming industry is mobile gaming. In its 2021 Global Games Market Report, Newzoo predicts that mobile games will grow to account for 52% of all market revenue in 2021 (US$90.7 billion), with those played on smartphones specifically representing US$79 billion (up almost 5% year on year). In contrast, the revenue achieved by P.C. games (down 1.7%) and console games (down nearly 9%) is set to fall as players switch to mobile devices that they can play on regardless of their location.

In the U.S., all three major operators (AT&T, T-Mobile, Verizon, and T-Mobile) have already begun working with cloud gaming companies such as PlayGiga, Hatch, and Microsoft Xbox Game Pass to test and develop services, including bundling deals that offer mobile data packages alongside subscriptions. Similar collaborations are happening elsewhere, including B.T. (Google Stadia), Vodafone (Microsoft Xbox Game Pass), Telefonica (GeForce Now), S.K. Telecom (Microsoft), Korea Telecom, and KDDI (Ubitus). As more players switch to the benefits of cloud gaming on their smartphones via superfast 5G networks, the number of those partnerships is only set to increase. Cloud gaming arguably also does not require game publishers to be dependent on app stores for distribution doing away with the app store fee requirements and reaching consumers directly.

Microsoft as pioneers of hardware-independent gaming subscription service Game Pass, introduced in 2017, are likely to continue banking on creative prowess of Bethesda’s twenty-three studios that are developing games for the Xbox ecosystem. And they will leverage these new titles to forge partnerships with carriers to lead the way in cloud gaming in the 5G world.

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