Xbox is set to introduce an ad-supported tier to its cloud gaming service after testing it internally, according to reports.
Xbox Cloud Gaming, launched in 2017, is a Netflix-style games platform that works across consoles, PCs, browsers and mobiles. With a Game Pass subscription to the Ultimate tier — which costs £22.99 a month — gamers are given access to a library of 500 titles, including new games.
The rumoured new tier would give users five free hours of Xbox Cloud Gaming each month in exchange for watching a two-minute advert before playing.
Sources told The Verge that the free tier would include a mix of content: games players might already own, titles featured in Xbox’s Free Play Days (limited-time access to full games, essentially a demo window), and Xbox Retro Classics, which is made up of Activision’s back catalogue from the 1980s and 1990s.
It would reportedly be available on PC, Xbox consoles, browsers and the new ROG Xbox Ally X, Xbox’s first handheld device.
Although this would be the first time Xbox has offered a free ad-supported tier, the idea has been in discussion for some time. In 2023, Xbox CFO Tim Stuart openly outlined the company’s interest in shifting away from one-off game purchases and towards models based on subscriptions, advertising and free-to-play access.
‘You want to get players in the ecosystem, you want to get them playing the games, and then that generates more dollars,’ he said.
‘I think we are going to move away from those big upfront purchases to more of the subscription models, advertising models, free-to-play models — more of a consumption-based approach.’
Speaking at the Wells Fargo TMT Summit, Stuart also outlined another part of the strategy, namely reaching regions ‘that aren’t console first’. He pointed to Africa as an example: ‘50 percent of the population is 23 years old or younger with a growing disposable income base, all with cell phones and mobile devices, not a lot of high-end disposable income, generally speaking.
‘So, we can go in with our own business models and say — there are millions of gamers we would never have been able to address, and now we can go in with our business models.’
The free ad-supported tier has not yet been officially announced, but if launched, it would mark the first major ad-based access model for a console gaming platform and could signal a broader shift in how cloud gaming is monetised. For advertisers, it represents a potential entry point into the console gaming space, which has traditionally been difficult to access compared to mobile and PC gaming.
It also comes after Microsoft increased the price of its Game Pass Ultimate subscription from £14.99 to £22.99 earlier this year, prompting backlash from players. Despite the increase, Microsoft said in July that Game Pass generated ‘nearly $5 billion’ in revenue and is profitable, although it does not disclose subscriber numbers or overall figures.
Microsoft has been approached for comment.
Main image by Sam Pak on Unsplash