Xbox is experimenting with game streaming that includes advertisements. Amazon is integrating Luna with Prime Video. Both companies acknowledge that cloud gaming has not yet succeeded.

      TL;DR: Xbox is experimenting with ad-supported cloud game streaming, while Amazon is incorporating Luna into Prime Video for all Prime members. Both companies are shifting strategies after experiencing low adoption rates for cloud gaming.

      On the same day, Microsoft and Amazon revealed new strategies for cloud gaming, acknowledging that the market has not attracted the audience they anticipated. Xbox plans to test an ad-supported game streaming model that allows users in its Insider Programme to stream games they already own for free, limited to one hour per session and featuring ads. Meanwhile, Amazon is integrating Luna into Prime Video, adding a "Games" option alongside Movies, TV Shows, and Sports for Prime subscribers.

      Xbox's strategy draws inspiration from Netflix, which gained millions of users with its ad-supported tier by reducing the pricing barrier. Xbox is applying a similar approach to cloud gaming: if users are reluctant to pay for a subscription, perhaps they would be willing to watch ads to play games they already own. Although an ad-supported Game Pass tier is not yet in place, this trial signals a possible direction. Xbox CEO Asha Sharma, who took over from Phil Spencer in February, has lowered subscription prices, announced a next-gen console planned for 2027, and recently reduced the division’s workforce by 20%.

      Amazon's shift is more straightforward: Luna lacked visibility, so the company is placing it in a location where users are already active. The service reportedly had millions of users across 14 countries but faced a lack of awareness. Jeff Gattis, head of gaming at Amazon, stated that they are not seeking to compete with PlayStation, Xbox, or Steam, emphasizing that “Gamers are well-served, if not overserved.” Amazon aims to attract casual gamers interested in trying titles like Harry Potter or Tomb Raider without the need for a console. Google attempted a similar approach with Stadia, which was ultimately shut down in 2023.

      The core issue for cloud gaming remains latency. No amount of changes to the business model can alter the challenges of streaming interactive content over unreliable internet connections. After acknowledging its outdated methods, Google revamped Search around AI, while both Xbox and Amazon are recognizing the need to move away from their original cloud gaming strategies. When Google made drastic changes, users shifted to alternatives, and the concern for Xbox is that introducing ads in game streaming could evoke a similar backlash that previously led EA and Take-Two to eliminate in-game advertising due to player dissatisfaction.