Microsoft is working on an ambitious new Xbox game streaming service, backed by the power of its cloud technologies. While details on the project are limited, we already have an idea of what this Netflix-style service could offer. Here we break down everything we know so far from announcements and various accompanying leaks.

Xbox Scarlett: Everything we know about Microsoft's next gaming console

Building a new generation of cloud gaming

Xbox head and Microsoft's Executive Vice President of Gaming, Phil Spencer, wrapped up its E3 2018 showcase with a tease of products to come. Alongside the first mention of the next Xbox consoles, touched on its plans to debut "console-quality games streaming" in the years ahead. Fast forward to October 2018, Microsoft formally unveiled Project xCloud, while providing a brief overview of the technology.

Work on the mysterious streaming service has been underway for some time, with initial prototypes dating back to 2013. An internal demonstration saw Halo 4 running on Windows Phone and PC, with the Xbox 360 game running solely in the cloud. Microsoft reportedly reduced latency to just 45 milliseconds on a Lumia 520 handset, showcasing its flexibility for low-end hardware. Reflecting on the technology, Spencer later admitted the service was too costly for the time, with recent progress on Microsoft Azure "changing the economics and quality level."

Related: Why Microsoft's Xbox 'Project xCloud' may finally do game streaming right

Microsoft drastically scaled its cloud gaming efforts over the following five years, appointing Xbox veteran, Kareem Choudhry, as the head of its new Gaming Cloud division. The newly-assembled team has been tasked with building gaming technologies for Microsoft Azure while supporting major partners like Ubisoft, PUBG Corp., and Tencent.

Microsoft has confirmed plans to merge four custom Xbox consoles stripped-down into modular server blades for its newly-proposed solution. With 54 Microsoft Azure regions spanning 140 countries, it hopes to scale this infrastructure across the globe. Furthermore, it has already rolled out an early rack of xCloud console hardware at its Quincy data center, three hours east of its Seattle headquarters.

These cloud systems are expected to first launch for developers to build games for the service, ahead of the later public release. This is a similar implementation to Sony's PlayStation Now, which also leverages specialist variants of its consoles.

The power of Project xCloud is promising

Microsoft is no stranger to streaming, with several recent instances of low latency broadcasting for games. Familiar to most, the Xbox One already features game streaming to Windows 10 over local networks, although this doesn't account for the complexities of the internet. Microsoft's recent investments in Mixer are also notable, with working examples of low-latency video streaming online and shared controller inputs.

Several reports now indicate that Microsoft plans to approach game streaming with a new hybridized solution, delivering a blend of both local and cloud-based processing. The system would see latency-sensitive aspects of a game handled locally, such as inputs and collision, while other parts, such as graphics-intensive outputs, would be backed by the cloud.

Microsoft-registered patents also hint at an AI-enhanced backend, with instances of Xbox One titles cached in xCloud's active memory. These remote instances aren't linked to profiles, allowing players to seamlessly "boot" and request these preloaded titles, without perceptible initial load time. Paired with usage data, the service can anticipate demand, scaling resources to player needs. This would further enhance the on-demand nature of xCloud, reducing overall wait times.

Various rival services have attempted and failed to gain traction over the years, with major flaws still present in current technologies. Most services stream raw video data and controller inputs over the internet, which causes notable latency even on top-tier networks. Microsoft's rumored solution would prioritize the basics locally, without compromising on graphical fidelity. However, it appears developers won't need to invest additional resources for xCloud support, which could push the service beyond competitors.

Take your games on-the-go

Microsoft's plans to use game streaming to expand beyond the living room and reach as many gamers as possible. Specific mentions of Xbox, PC, and mobile have been made, with solutions planned for all three platforms. Microsoft's early demos of Project xCloud have featured Samsung Galaxy S8 Android phones, with a dedicated app expected for these devices. Microsoft is heavily promoting support for Bluetooth controllers, though the official app will also support on-screen touch controls.

The game streaming service is rumored to tie into the release of "Scarlett" – the upcoming duo of Xbox devices in development. Backed by recent statements from AMD CEO, Dr. Lisa Su, it appears cloud computing is heavily ingrained into Microsoft's future hardware vision.

It's unclear what scope of variety we should expect from the Scarlett family, though these will likely be tailored to separate gaming audiences. While a high-end console could draw enthusiasts, a low-cost unit similar to the canceled "Project Hobart" is expected to go hand-in-hand with streaming. Our sources have told us that early versions of the Scarlett xCloud units might feature fiber-optic internet ports to help developers test and simulate different types of networking environments too.

If a low-cost, lightweight Xbox console hits the market, we could see applications of game streaming for various uses. While such a console could deliver budget gaming with few compromises, PC and mobile support are ideal for gamers on-the-go.

Project xCloud Xbox One games list

In current marketing, Microsoft has discussed several major Xbox One games headed to Project xCloud. We've already seen Forza Horizon 4, Halo 5: Guardians, Gears of War 4, Sea of Thieves, and Cuphead streaming live via the technology. Titles like Rockstar Games' Red Dead Redemption 2 have also been named, which we also expect on the service.

In Microsoft's initial announcement for Project xCloud, it touched on the seamless onboarding process for game developers. Studios will have the ability to deploy their games with "no additional work," indicating a hefty lineup should be on the horizon.

Xbox Project xCloud game streaming release date

Microsoft is yet to discuss release dates for its game streaming service, however, plans to offer "public trials" in 2019. We're yet to receive details on gaining pre-release access, though Microsoft hopes to test varying "volumes and locations" with these tests. In 2017, Phil Spencer estimated the Xbox streaming service will hit the market "in the next three years" setting its full release date for 2020, or prior. Despite indications of a 2020 release for Xbox Scarlett, we expect Project xCloud to launch before the console.

Over to you

What would you like to see from an Xbox game streaming service? Let us know your thoughts in the comments section below.

Updated December 12, 2018: We've refreshed this article with the latest details on Project xCloud.

This post may contain affiliate links. See our disclosure policy for more details.