TOKYO -- Microsoft is accelerating its push into cloud-based games with plans to bring next-generation gaming to Japan later this year, a sign that competition is heating up among long-established game makers and tech giants.
The U.S. company announced on Thursday that it will roll out cloud gaming in four countries, including Japan and Australia, through its Xbox Game Pass Ultimate, a subscription service that allows gamers to download more than 100 games to their Xboxes or PCs, or play cloud-based games.
The service has been available in the U.S. and Europe since last year, and some test runs have taken place in Japan. Microsoft plans to work on the development of data centers in Japan as it gets ready to launch the full-scale service by the end of 2021.
Cloud gaming allows for instant play. It is thought that the deployment of superfast, 5G wireless communications will facilitate the rise of cloud gaming as the technology also offers reduced signal lag.
Tech giants like Amazon and Google have launched similar cloud gaming services.
In Japan, Sony Group helped pioneer the sector, introducing a cloud gaming service in 2014. The entertainment conglomerate, which has tied up with Microsoft in the cloud gaming market, offers a subscription service called PlayStation Now from which users can stream games to their consoles or PCs. The service now has 3.2 million subscribers, up 78% from a year earlier.
In a March report, Newzoo said it expects the global cloud gaming market to hit close to $1.5 billion this year, more than double its size in 2020. By 2023, the Dutch research company estimates the market to reach $5.1 billion.
Microsoft and Sony launched their newest gaming consoles in November. Microsoft said it aims to add cloud gaming to its new Xbox Series X hardware, while Sony in the past has made efforts to gain more users by slashing subscription fees.
The gaming industry has enjoyed pandemic-driven demand since last year, when many consumers were stuck at home. The lockdowns and other restrictions presented gaming companies with an unprecedented opportunity to attract non-gamers and turn them into loyal buyers of hardware and game titles.
In another move toward creating a "Netflix for gaming business," Microsoft revealed that it is developing a dedicated device for cloud-based games that can be connected to a TV or display, as it bids to "reach gamers on any TV or monitor without the need for a console at all."
While Microsoft has said it does not plan to ditch its console business, the company has worked toward expanding its Netflix-style subscription service so it can be available to PC and smartphone users, thus obviating the need for expensive consoles.
On the other hand, Japanese gaming giant Nintendo has illustrated that casual gamers are willing to pay a certain amount of money for a console if attractive and interesting games are available. The company's smash-hit "Animal Crossing: New Horizons" has sold over 32 million copies since its release in March 2020, boosting sales of its Switch console.