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The switch to bring cloud gaming products to its Xbox consoles is a move that can impact the revenue potential of Microsoft in the mid to long term respectively.
Redmond, Washington-based American multinational technology corporation Microsoft Corporation (NASDAQ: MSFT) is bringing cloud gaming services to its Xbox consoles later in the year. As reported by CNBC, the Xbox Cloud Gaming product will be rolled out onto the new Xbox Series X and Xbox Series S consoles as well as older Xbox One machines. Previously, this cloud gaming option is only available to consumers via mobile phones and Personal Computers.
The embrace of gaming as a form of entertainment soared in 2020 as the coronavirus pandemic and its ensuing lockdowns pushed consumers to seek in-house entertainment. With many options available, the sales of gaming consoles peaked, and game publishers also presented the cloud streaming for additional flexibility. The Microsoft move to bring the cloud service to its consoles is targeted at attracting even more players from the industry which is now worth about $180 billion.
Beyond the Xbox Cloud Gaming product, Microsoft is also focusing on the Xbox Game Pass, a subscription services that lets consumers stream over 100 titles for just $15 per month. Given the firm’s wide array of options, it can best compete with the bigger names in the industry including Japanese rival, Sony Group Corp (TYO: 6758), and its very popular PlayStation gaming consoles.
Microsoft Cloud Gaming and Revenue Boost
The switch to bring cloud gaming products to its Xbox consoles is a move that can impact the revenue potential of Microsoft in the mid to long term respectively. Besides gaming, Microsoft is exploring new ways to shore up its revenue, with plans to revise the pricing for its premium products like Microsoft Office 365 amongst others. The deal is set to add an additional $5 billion in revenue.
The Microsoft product suite has been evolving for over a decade with this pricing change coming off as the first substantive price upgrade since then. The company is confident its products are well designed to offer the right value irrespective of the increments.
“Since its launch a decade ago, Office 365 has grown to over 300 million commercial paid seats. Along the way, we have continuously re-invested to meet the changing needs of our customers. Four years ago, we introduced Microsoft 365 to bring together the best of Office, Windows, and Enterprise Mobility and Security (EMS),” the official update stated “On March 1, 2022, we will update our list pricing for the following commercial products: Microsoft 365 Business Basic (from $5 to $6 per user), Microsoft 365 Business Premium (from $20 to $22), Office 365 E1 (from $8 to $10), Office 365 E3 (from $20 to $23), Office 365 E5 (from $35 to $38), and Microsoft 365 E3 (from $32 to $36). These increases will apply globally with local market adjustments for certain regions.
The pricing of education and consumer products has not changed at this time. The shares of Microsoft surged in anticipation of these positive events with the company’s market capitalization pegged at $2.27 trillion. The stock is paring off its gains at the moment, with a drop of 0.67% to $302.62 on Tuesday.