Microsoft explains why Xbox cloud game streaming is so costly

Microsoft's corporate VP of Xbox Sarah Bond clarifies why Xbox game streaming is a costly venture.

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Xbox,s game streaming infrastructure isn't cheap to operate. The service is bundled as a value proposition in Microsoft's Xbox Game Pass Ultimate subscription, which helps subsidize the cost of the service. But ultimately it sounds like Xbox Cloud Streaming, aka xCloud, has not been profitable for Microsoft for one big reason: the

As part of her testimony in the recent FTC vs Microsoft evidentiary hearing, Xbox exec Sarah Bond offers more details about how xCloud works. Microsoft's game streaming service doesn't actually use server blades or Azure. Instead, xCloud uses literal Xbox Series X hardware to power the service. That means Microsoft has to acquire more Xbox consoles--which it does so at a loss--in order to beef up its servers.

Microsoft has previously said that over 20 million people have tried the service, but the company's lawyers in this case have said most people use the service to try games rather than play them...and the majority of cloud users are on console.

Below we have a brief transcript of the exchange between Microsoft legal counsel Beth Wilkinson and Microsoft's Sarah Bond on the topic of cloud streaming.

Q In the xcloud streaming service, do use Azure?

No

Q Why doesn't Microsoft use Microsoft cloud to stream Xbox games?

These are console games. They are built using the devkit we talked about with the console operating system and architecture. So they can only be streamed from consoles.

Q Because you have to use consoles to stream, does that affect the costs and profits?

Absolutely a factor. That hardware has a particular cost to acquire. There's a cost of running it, and cost of the data stream.