New division looks to be aiming for a fully-streamed version of Xbox Game Pass, but it's role in the shorter-term isn't quite as clear

The cloud may have become an everyday tool for us all, unlike say VR and cryptocurrencies, but the term still has a lot of cachet in terms of corporate enthusiasm. So it's little surprise that Microsoft has launched a new Cloud Gaming Division - though which parts of the current gaming business it oversees and what it plans are for the future are still somewhat unclear.

The new division is headed up by 20-year Microsoft veteran Kareem Choudhry, who has previously worked on Xbox hardware as well as business segments such as Outlook.

In an interview with The Verge, Choudry said: “Phil [Spencer] really wanted a dedicated team focused exclusively on the gaming cloud. Those were conversations that started happening last summer, and we really started creating the structure of the organization at the end of last year.”

Microsoft has long been keen to marry cloud services with its gaming strategy - with its heavy preponderance of games-as-a-service titles for instance, and it's blending of PC and Xbox gaming. So it's unclear what specifically comes under the team's remit.

Presumably the use of Azure Cloud for gaming would be the core aspect, but current cloud-based services, such as those that support practically every aspect of the Xbox console day-to-day presumably aren't its sole responsibility.

Getting more developers and publishers to use Azure Cloud must be a key aim for the new team. Many games already run on the service, for example Rainbow 6 Siege and PlayerUnknown's Battlegrounds - but the latter also utilises Amazon servers too. Mobile developers must also be a big target.

Choudry is bullish about the aims of the new division: “We believe there is going to be 2 billion gamers in the world, and our goal is to reach every one of them.” Though whether that's through a Microsoft-branded service such as Xbox, or simply in the background as a provider of cloud services wasn't made clear.

He goes on to mention Xbox's Game Pass subscription service: "We're really pleased with the success that's happening [with Game Pass]. We continue to believe in user choice, and we also believe there's room in the industry for a gaming subscription and that's what we're going to build."

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Now Xbox Game Pass doesn't need building, it exists already - and first party titles such as Sea of Thieves are coming to it day-and-date. And with its download-based design, it's a very smart admittance by Microsoft that the market isn't ready for, and current internet technology isn't up to providing, a proper streaming-based gaming service. It's not likely to set the pulse rates of investors racing.

“We’re spending a lot of time thinking about that space,” explained Choudhry. “What we’re doing with Game Pass and creating a subscription-based product, where over half the content is third-party content. I would say we’re getting started from a subscription product perspective.”

However, the team appears to be looking to a fully-streamed future: “We’re looking at ways to make that content available to anyone no matter what device they’re on,” said Choudhry.

With so many having tried and failed already to make streaming stick, it's certainly a long-term play for the company. But building up a subscriber base and making sure the publishers are onboard is a massive first step, one that Xbox Game Pass is well underway with already. 

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