Tuesday, November 22, 2011

Next Xbox predicted to expand cloud based services, full retail downloads

Microsoft has been slowly planting seeds for new services on Xbox 360 over the past few years that it hopes to fully feature in its next Xbox. Cloud based storage and greatly expanding its digital downloading services are expected to be major components of its next generation game console.


Much like Microsoft did with Xbox Live on the original Xbox, the company likes tests the water on current gen technology before it greatly expands the tech for its next gen console. At GDC China, Microsoft’s cloud expert, Brian Prince, talked about the role cloud-based services will play in gaming future. He explained that there are currently two models. You can build games to scale to the cloud yourself, or harness cloud gaming services like Onlive and Gaikai.

"These are really gaming platforms as a service," said Price. "There are some limitations here, but I really do think this is the distant future of gaming in the cloud," said Prince.” You will be seeing things in the Xbox platform that's cloud-specific. I'm already doing it, it's really exciting, but I can't tell you about it or else I'll get fired.”

Prince made reference to the company's new Azure cloud service and the commitment Microsoft has already made. The six cloud servers alone have cost Microsoft $2.5 billion, according to Price. With Amazon, Google and Apple all making huge advances in cloud computing, Microsoft doesn’t want to be left behind.

Another rumor swirling around Microsoft’s next gen Xbox is that it will be priced at a much more competitive level than ever before. The easiest way to lower manufacturing costs is to remove the onboard storage medium. Amazon recently did this with their Kindle Fire to keep cost at a sub-$200 level. Cloud based storage is the answer to Microsoft’s desire to lower the next Xbox’s price to expand their consumer base.

If Microsoft takes the storage issue out of the equation, it could then open the flood gates for full retail game digital downloads. The company currently releases older, full retail game digital download every Tuesday on Xbox Live. Microsoft could expand this with their next Xbox to include same-day-as-retail digital downloads. Although, no one expects the extinction of game console physical disc drive in the upcoming generation, Microsoft is the game hardware manufacture that is leading the charge in that direction.

 "I don't expect vendors to leave physical media formats out of next generation consoles. Gaikai and OnLive are viable game delivery systems but in the near term cloud gaming services can't yet allow access on a scale to realize their inherent disruptive potential,” said M2 Research analyst Billy Pidgeon to Industry Gamer.

“Again, back to boring basics, next generation game consoles and dedicated gaming handhelds must link to user accounts stored on servers rather than locking down identity and content ownership at a device level. If Nintendo and Sony do not follow Microsoft's lead here, it will cost them market share next generation."

Despite all of these new areas Microsoft hopes to make advances on with their new Xbox, it might still be too soon. Digital downloads means a loss of a physical presence in front consumers at a store. As silly as this sounds to some gamers, companies in a lot of ways still rely on that kind of marketing. Partnerships with GameStop, BestBuy and Wal-Mart are still incredibly important to game companies’ business plans.

The other glaring problem with cloud based storage is being able to have constant access to it. People centered around cities usually don’t have to contend with this issue, but the majority of Americans still don’t have guaranteed access to high speed internet. The technology is there, but the foundation is still being put in.

It’s more likely the generation after the next will have a greater emphasis on cloud storage at this point in time. Although, Microsoft have never been scared away from offering multiple console skews. Xbox 720 could be offered with a dedicated hard drive and priced similarly with this generation’s Xbox, or Microsoft could offer a $250 Xbox 720 with cloud-based storage, or even a hybrid of both.

"I think any smart console manufacturer will want to offer a mix of distribution points for consumers - both in the cloud and at retail stores. There is such a broad spectrum of games that consumers are playing, and there is not a one-size fit all solution,” said Colin Sebastian of RW Baird. “So I would expect a company like Microsoft to leverage what they've built in terms of online services, cloud computing and Xbox Live, to offer a menu of games.

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