Feature Article

Phil Spencer Doesn't Think That Cloud Systems Will Fully Replace Traditional Consoles Just Yet

Cloudy skies.

Xbox head Phil Spencer is a busy man, his mind occupied by the next generation of Xbox consoles and helping to build new development teams. He and the people working in Microsoft's Gaming division are also managing an ecosystem that's trying to serve the needs of as many players as possible, which will include looking into new technologies. Cloud-based gaming touches all of those areas, which is why he's been championing Project xCloud, Microsoft's game streaming technology that will let you access the power of an Xbox console through your phone via an internet connection.

GameSpot recently spoke with Spencer about a number of topics, including how he sees xCloud fitting into Xbox's repertoire. He also laid out how he thinks xCloud will work in an industry that's traditionally orbited around consoles in the home, and how new technology will change things going forward.

"It's one of the directions the industry is headed," Spencer said. "To me, it's about what you as a gamer want to do, and I'm not trying to tell you that owning a box that plays video games is a bad thing or that somehow that's not needed.

"I think that the cloud inevitability as part of gaming is absolutely true," he continued. "But we have more compute devices around us than we've ever had, whether it's your phone, a Surface Hub, or an Xbox. The world where compute devices are gone and it's all coming from the cloud just isn't the world that we live in today."

Physical devices are still very much part of the equation when it comes to cloud gaming, but Xbox itself isn't making a new device specifically for it. "Last year we talked about xCloud and then we said we were working on new game consoles, but that's all I said." Spencer clarified, "We didn't say that [a streaming console was in the works]. I think maybe some people thought that that was the disc-less one that we just shipped. We are not working on a streaming-only console right now. We are looking at the phone in your pocket as the destination for you to stream, and the console that we have allows you to play the games locally."

"If you bought a big gaming PC and you like playing games there, I want to respect that and meet you where you are and bring the content and services that you want to that device. If you want to buy an Xbox, if you want to play Minecraft on a PlayStation, I want to make sure that comes to you there."

One of the chief concerns that has always surrounded cloud gaming is lag. Specifically, how fast your controller inputs will translate to action on a screen. It was an issue in some cases for Google Stadia demos, especially for fast-paced shooters such as Doom. Spencer recognizes this and makes no bones about those concerns, saying "I don't think anybody should tell you that there's no lag."

"Going back to our transparency, there's a truth that I think is always important for us to talk about with our customers. In xCloud, we are building a convenience capability to allow you to take your Xbox experience with you. Meaning, that's why we focus on the phone, and the experience is not the same as running the games on an Xbox One X. I'm not going to say that it's an 8k 120 hertz thing. That's not what we're doing. We're going to bring convenience and choice to you on your phone."

"You can jump in a party, we can voice chat. Everything works the same as it does when I'm sitting with my console from a community and content perspective but you're running it from a cloud, which is going to feel different."

We talk about Project xCloud and we use words like "trials" not because we don't believe in our tech--our tech is as good as anybody's tech out there, and the team is doing really amazing work--but this is about the reality of time and choice for customers.

Given that he's been traveling with an early version of xCloud on his own phone playing games on it out in public, it would seem that xCloud is in a feature-complete state. Public trials start in October this year (a month before Google Stadia), but we asked if it'll launch as a fully-formed service. "We will start in 2019, this year, in certain markets and then we will just continue to roll it out. We're doing our internal trials with xCloud now, which means people on the team can now install the application on their phone and stream games."

"One of the benefits we have working at Microsoft is the Azure data centers globally, which allow us to put hardware as close to people as we possibly can. And we can leverage the fact that Microsoft has spent a lot of money establishing data centers to help us accelerate this build. So we're going to start in 2019 and have people playing Xbox games on their phones, and we'll get a ton of feedback."

Project xCloud's launch this year only marks the beginning for the Xbox game streaming service; Microsoft will continue to iterate on it while its in players' hands, and Spencer emphasizes that technological shifts take time. "I think this is years away from being a mainstream way people play. And I mean years, like years and years."

Phil Spencer on stage during Microsoft's E3 2019 press conference. -- Photo credit: Jason Lewis
Phil Spencer on stage during Microsoft's E3 2019 press conference. -- Photo credit: Jason Lewis

"Let's take Netflix, which is 20 years old. I think we forget that sometimes because tech moves so fast. It's 20 years old at this point, so it took two decades for us to get to the point where shows like Game of Thrones and House of Cards are some of the biggest shows in the planet and mainly watched via streaming. I think game streaming will get there faster than 20 years, but it's not going to be two years. This is a technological change. While it seems like it happens overnight, it doesn't."

"It takes time for these services to evolve. We are building for the long-term, but that's why choice is so critical. I'm not trying to say go sell your consoles today and switch over to streaming because the experience just isn't the same as playing on your console, but I do think in terms of reaching everybody, the democratization of play and content, it's important that we don't lock all of these experiences behind purchasing a certain device."

"And way over time, we'll have a global service that can reach everybody and the infrastructure to reach any customer with a consistent and high quality internet service, but that's going to take time. We talk about Project xCloud and we use words like "trials" not because we don't believe in our tech--our tech is as good as anybody's tech out there, and the team is doing really amazing work--but this is about the reality of time and choice for customers."

Down the road, the evolution of xCloud could lead to some creative uses; we've seen hints of it in Crackdown 3's multiplayer and how it handles physics. But Spencer and the team are thinking outside of games themselves as they have plans to make it an integral part of the industry's biggest convention, saying "At E3 [in the future], our plan is to allow people coming to the show to actually play games, play Xbox games on phones at the show."

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Part of cloud gaming's success, and xCloud in particular, rests in how developers account for the new technology. It's also an aspect that Xbox is already getting ahead of, and Spencer detailed how the team is doing it. "We've already started putting xCloud servers near locations where our largest third party developers are. So now we're starting to get developers at third parties on it so they can see their game on a phone, which is critical because there are things like font sizes that if you wanted to take advantage and understand how the game runs on the phone, you want to make it available. You want them to see it and experience it themselves."

"We've also already put into the Xbox SDK, because if you're streaming, a developer might want to do something different if the game was running locally. All the developers that are building Xbox games today have access to that capability of determining whether the game is being streamed or running locally, which I think is a great addition."

"You'll have certain developers that will take advantage of it early. We already have some of the early adopters asking for [it], because there are certain things that the cloud makes more possible than happened in the home. A good example of that is our blades right now that have all the Xboxes in the data centers have multiple Xboxes on one blade...basically like a bunch of Xboxes in your house that are hardwired together. So the latency between all of those consoles is negligible. It's almost a zero because they're literally hard-wired together. If we were to play games online, there is latency from where you live and I live, right? Our two Xboxes just take time to sync."

More Exclusive Phil Spencer Coverage

Our conversations with Phil Spencer covered much more in addition to this deep dive into Project xCloud and cloud gaming's place in the industry. For more inside looks at Spencer and his thoughts on the past, present, and future of Xbox, check out all our coverage in the stories linked below.

Got a news tip or want to contact us directly? Email news@gamespot.com

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Avatar image for pappafost

Cloud gaming could be revolutionary. Emphasis on COULD. I like the idea of them building xCloud or Stadia exclusives that wouldn't even be feasible with traditional local hardware. Imagine the equivalent of four GTX 2080 TI's in quad-sli streaming to an iPad Pro. That would be amazing. It would have to be the games exclusive to xCloud or Stadia though because multi-platform games will have to work on the lowest-common-denominator platform.

I also feel like Google is confusing features that excite them with features that excite me. They made a big deal about clicking a button in YouTube to buy a game. Granted that was at GDC, but still, why should I care? I am also not excited by them simply porting a bunch of the standard fare. I already have three boxes that can play it. But if they did something that that would be impossible locally, or take thousands of dollars worth of local hardware, that would be exciting.

Avatar image for RSM-HQ

Privileged American man spends billions and runs his mouth. More news at eleven!

Joke aside Phil Spencer has been doing good for the company it seems, really turned the X1 around for the better.

He's also just a bit contradicting in his messaging. His 'ultimate goals' change every week it seems.

Avatar image for deactivated-5d56ee35ee85a

Cloud gaming cons:

1) Always need to be online and have a very low latency to play. May never work properly in multiplayer shooters considering you can get rubber banding latency even when you have the game installed on your console. Try living or working on a military base in the United States if you want to see how bad internet can be in certain places or deployed overseas.

2) You never own any games which means no physical copy to trade in nor a digital copy so if they decide to pull the game from their streaming service you can't play it again ever.

3) You will have to pay a monthly fee even for single player games. This monthly fee will most certainly increase over time so you either have to pay it or don't play any games on your console you purchased

Cloud gaming pros:

1) If you love trying out a multitude of games without having to pay full prices for them then I guess this would be a perk. However, if your like me and only play certain games then your paying for games that you will never play. Although, I can see this being good for bored kids.

I can't think of any other pros.... If you know of any feel free to respond. Yet again Microsoft is pushing always online disc less technologies that a lot of customers don't want. Also, what happens if they ban you or the console for some reason because you broke their terms of service which could happen. Then your f****d!

Avatar image for stlmemrie

I am adult gamer, almost 40. Before that I was a young adult gamer. Also, I was a teenage gamer. And yes, it all started in the mid 80’s as a child playing Atari and Nintendo. For life, I guess.

I’m lucky enough to afford my gaming hobby (addiction?). I’m not lucky enough to play all the games or systems I buy. I just don’t have time. Work, family, kids, social life.

I’m most excited about xCloud because it will allow me to play my games in times/places previously unavailable to me. Example, I travel A LOT for for work. In fact, I’m at a hotel gym right now writing this up. You know what I would have rather done last night sitting in my hotel room? You’re on Gamespot, so I think you know exactly what I would be doing last night if xCloud was available.

It may not be perfect. I might not be able to play competitive online games seamlessly. But I have a library of titles that can still be enjoyed while traveling.

Avatar image for pappafost

@stlmemrie: I just wonder how bad the streaming will be over hotel WiFi though. It seems like the answer for people that travel a lot would be a 5G tablet or laptop, so you have your own dedicated connection.

Avatar image for shakesmcqueen

I think xCloud has a better chance of succeeding than Stadia, simply because you're not forced to jump "all-in" into cloud. You can use your console when it makes sense, and xCloud when it makes sense. And more than that, your digital purchases will actually follow you across both. In the case of Microsoft's first-party games, they will also follow you to PC.

With Stadia, it's either all cloud all the time, or nothing. Stadia is banking that the public is ready for this, which is a huge bet, because Stadia is pretty much toast if they are wrong. And they have one first-party studio making exclusive games for the platform, versus Microsoft's fifteen.

That's not to say whether I think either service will ultimately be a hit - but I think xCloud has a much better chance.

Avatar image for matheo81

seems a good way to go about it. I tried many different cloud gaming options and they all still do NOT really work. tearing, con loss, heavy lag with all of them no matter what line you are on. I do not expect Stadia or XCloud to be different. The connection technology throughout our planet is just not advanced enough and it won't be in MANY places for a long time. If you want to play a game in a not entirely frustrating way you need to have the hardware to run it. cloud streaming as a second choice seems smart. And yet I am sure this too will vanish again. The networks are neither fast nor responsive nor stable enough. And new big players in the field do not build new world wide connection lines. Could be with glass fibre and 5G Cloud Gaming will work, but only in major cities, forget your road trip or holidays combined with cloud gaming. Nintendo with its Switch did a step in the right direction. Spencer with Cross-Platform looks ahead. The best thing would be to end the rivalery and combine sources - Microsoft, Nintendo, Playstation, ... For the players (and not for the locked up market) !

Avatar image for jenovaschilld

@matheo81: Some countries have really low latency - which is more important then bandwidth- here in the USA, we just have too many forms and no universal standards for just what broadband is. Broadband can be DSL,CAble, Satellite, wireless, direct site wireless, and on and on- latency can be from 25ms - 2500ms or more. It can be unlimited or in some areas limited. It can be open or even throttled (comcast) if providers just do not want cloud gaming going across their lines for some reasons.

5th Generation of mobile data - will not be a guaranteed solution for cloud gaming. As 5th gen will be much like cable home internet - and it to will suffer from traffic and servers from state to state that can cause packet loss and latency spikes.

But cloud gaming is a platform makers wet dream, the ability to push out the middle man - publishers, brick and mortar, physical, used games- and they will encourage their consumers towards it sooner or later. I am fine with cloud gaming- IF : it gives a entertainment value worth paying for. And cloud gaming on my Spectrum 100gig cable broadband - still sucks balls, with anything but slow old turn based RPGs.

Avatar image for goobermcdermit

I think going towards cloud gaming is going to do more harm than good. There are many people out there including myself that if it goes that way, a new hobby will be in my future. Between data caps (which does not affect me) constant requirement of an internet connection (Im sure we have all experienced hiccups with our service provider) and that the games can just be removed when ever they feel like it, those points alone tell me that I will not continue to play games using services like that.

Avatar image for truthforever

Just because Phil Spencer makes pr for their last hope project, still no one needs it.

Phil I think it's enough now, don't speak anymore.

Years ago you told us single player games are dead. Also you told us every e3 that it's the best e3 .....

Can I play scalebound over cloud?

Avatar image for shakesmcqueen

@truthforever: He never said single player games are "dead" - he said the audience for them is more inconsistent than it used to be, because of the amount of oxygen being consumed by "service-based" multiplayer games, which is a completely reasonable point.

In the same interview he said this, he specifically called out the latest Zelda and Horizon Zero Dawn as SP games that did well, and then gives Sony the nod in general for being great at making those kinds of single-player experiences.

Avatar image for sealionact

@truthforever: You do know that Sony, Google and others are also planning cloud gaming services right?

But I'm guessing you just don't hate them...right?

Avatar image for truthforever

@sealionact: you have heard about psnow, its cloud Gaming.... Its Not really good , but ist still cloud.

Avatar image for badhras

I'm currently a PC gamer (mostly Steam) but I picked up 3 years of XBox Game Pass Ultimate. For incremental cost, I can see the appeal of playing some of those same games on my phone.

I'm not saying I would really want to play multiplayer Gears of War on my phone, but I could see some games being a reasonable fit.

I think the Microsoft story of giving its xbox players the option/choice to add cloud gaming makes a lot of sense. Right now, Stadia doesn't feel like an additive experience. It feels like a opportunity cost question between Stadia vs other console services.

Avatar image for davillain-

If and when Cloud Gaming officially comes, I'll stick to strictly gaming PC for good and so with that, digital gaming is one thing but not streaming though.

Avatar image for wretch1d

Not interested in cloud gaming at all, if MS push it too much ill go PS if PS follow suit ill go PC,

Avatar image for jenovaschilld

What ever opinion you have about Spencer, he did an amazing job of pulling Xbox One out of the ashes from its failed launch. Between Balmar/ Mattrick (sp), many believed the Xbox brand would not survive the 8th gen. It is still so hard to believe with the amount of momentum and good will that xbox went in to the 8 th gen with. The decisions Mattrick made were crippling and those effects are still felt now, to have shaved all so many 1rst party developers, pushed away Indie games, and bet it all on motion control and living room TV presence, It was sad to see this ground breaking platform take such a terrible hit.

Spencer can really do some good this 9th gen. Diversify the xbox library - the push for FPS and bro games have made this platform so stale. Almost no exclusives worth a shit. They need to invest more into RPG, Action, adventure, and also start pulling in new Asian games. Whether we like them or not, the top 100 sellers 8th gen have been rpgs, sports, and adventure. MS really needs a popular sports exclusive, a JRPG, RPG exclusive, and maybe sale their souls to have the next Elder Scrolls game be an exclusive. It is all about the games. No one gives a shit if it has this many HDMI in/outs for your cable box. The world buys a video game console for it games.

I've read MS is investing heavily in small developers and lining up first party developers along with some publishing investments. Are these all for 1rst part exclusives... not sure. But Sony is also buying up developers also. One thing for sure is that cloud is the future, but one that probably will not have much of an impact 9th gen, still a long ways to go.

Avatar image for truthforever

@jenovaschilld: ashes??? 360 time had the best games and exclusives ever and one time with Phil is a very sad and boring one . The gen ends now slowly and wow there is almost nothing new.

A yes gamepass is cheap, that's all :)

Avatar image for jenovaschilld

@truthforever: your comment is incoherent.

Avatar image for eli150

Gotta say i like this guy. I hope Xbox gets better next gen. Still buying a PS5 though.

I agree with what he has to say about cloud gaming and i don't think we can expect to see it run properly anytime soon. In short, Stadia is going to fail. In my opinion.

Avatar image for just1mohr

I concur, well said. But in the interim if cloud gaming is where it is heading, then I am not heading there. The industry will not see a penny from me anymore as I am not wasting my money on playing a game for hours & weeks and to grow a love for it, only to have it ripped away from me. I will simply play all the many other physical & digital games I own & I had already begun to amass a decent physical collection of. I have spent thousands over the years on many consoles, but what the industry is trying to do now is to bleed you indefinitely & I will not be bled anymore!!!

Avatar image for BigPrimeNumbers

Phil is hitting all the right notes in these interviews; definitely happy with what I'm hearing from him :)

Avatar image for walbo

@truthforever: ffs bit of a difference between a guy who promotes toys for a living and a guy that gassed 6 million Jews give your head a wobble man.

Avatar image for videogameninja

Like my parents who still cling to their record collection I will probably still hold on to physical game releases until the very last moment they are offered.

I know that cloud gaming is the future of gaming, and in some ways is inevitable, but…

I don’t care.


Avatar image for lion2447

The one major problem cloud gaming continues to gloss over are data caps. I don't have unlimited data to support this cloud gaming requirements and from past comments many other people don't either. Stadia alone requires 20Mbps for 1080p gaming. This would mean ~9GB per hour of gaming.

The major hurdle for cloud gaming to become more popular would be for ISP's to give better plans with higher or unlimited data caps at reasonable prices. Without it, cloud gaming won't get past the higher average cost to play vs current consoles and PC.

Avatar image for Mogan

@lion2447: As datacaps get more and more painful, it'll get harder and harder for ISPs to maintain them. I imagine there'll be a period of discomfort, where datacaps are really making it difficult to stream games, but that'll create so much push back that datacaps will either be raised so much they stop mattering, or just go away entirely at a much more reasonable price.

Avatar image for lion2447

@Mogan: If only that were true everywhere. I live in Canada where our choices are Rogers or Bell (or Telus as the smaller third choice). When Netflix first arrived in Canada the first thing Rogers and Bell did was decrease data caps. They didn't want Netflix to compete with CraveTV or Shomi (now defunct), so instead of making their own services better, they tried to stiffle Netflix's services. Although it didn't work, it did mean other aspects of using the Internet were reduced.

Just last year they increased their prices across the board and increased the overage fees for going over the data cap. They may give more data per month but it always comes with a price increase.

As a side note, the prices on their website are also shady. What they advertise is only for new customers. If your a current or longtime customer they give you the honour of charging $20 more than advertised. That little asterisk is a powerful tool.

Avatar image for Tekarukite

@lion2447: some of that is political, though. so it's up to us to support candidates that want to maintain net neutrality, for example, or scrutinize ISP's for shady business practices.