Microsoft's Xbox division announced Thursday it will test an advertising-supported method for streaming video games, while Amazon revealed plans to integrate its Luna cloud gaming service into the Prime Video streaming platform. Xbox stated the goal is to give more people affordable ways to play games. Amazon's adjustment will provide Luna with more prominent placement on its website, as the service was previously only accessible through a dedicated site. The two companies have succeeded in cloud computing but have faced challenges in cloud gaming due to unreliable internet connections that can result in latency issues.
Xbox Tests Ad-Supported Cloud Gaming with One-Hour Sessions
Microsoft announced in a blog post that gamers participating in the Xbox Insider Program can join the test with a one-hour session limit. The test applies to games already in a user's library. Xbox stated that advertising has existed in gaming for decades, from in-game placements to free-to-play models. The company said advertising can help lower the cost of access when done well and built with the player in mind.
Xbox has not created an advertising tier of its Game Pass subscription service. Xbox has pursued advertising in the past, and customers have not always been receptive. In 2024, one person complained about a McDonald's ad appearing on a screen for selecting games. Publishers Electronic Arts and Take-Two Interactive have experimented with ads and quickly backpedaled in response to criticism.
Amazon Integrates Luna into Prime Video Platform
Amazon announced plans to add the Luna cloud gaming service to its Prime Video streaming platform. Amazon includes Prime Video in Prime subscriptions, which cost $14.99 per month. Previously, Luna was only accessible through a dedicated website. With Luna, users can play on smartphones and standard computers without purchasing consoles or dedicated gaming PCs.
Amazon's gaming head, Jeff Gattis, told CNBC in an interview that the company does not aim to lure hardcore gamers or compete with console makers. By integrating Luna into Prime Video, the digital commerce company is doubling down on its push to attract casual players with party games and recognizable intellectual property like "Harry Potter" and "Tomb Raider."
Xbox Implements Leadership Changes and Workforce Reduction
Meta executive Asha Sharma replaced Phil Spencer in February as Xbox CEO. Since taking the role, she has appointed new leaders, touted a forthcoming console, pushed for exclusive games, and dropped subscription prices. This month, she announced a 20% reduction in force and said Xbox will spin out four development studios.
Microsoft started selling its inaugural Xbox console in 2001. Today, Xbox trails Nintendo and Sony in console sales. The subsidiary is trying to return to growth and widen margins after spending $75.4 billion on Call of Duty publisher Activision Blizzard in 2023.
Luna Targets Casual Gaming Market with Millions of Users
Luna has "millions" of users across the U.S. and 13 other countries, with the goal of reaching 10 million to 20 million "as quickly as we can," Gattis said. Amazon entered the cloud gaming market during the Covid pandemic and debuted Luna in 2020, three years after Microsoft had introduced Game Pass, and one year after cloud challenger Google revealed its own cloud streaming option, Stadia. Google discontinued Stadia in 2023.
Gattis said there is a robust segment of consumers who want to play games but do not want to invest in increasingly expensive hardware and software. In a market where PlayStation, Xbox, Epic Games and Steam are "fighting it out with each other," Gattis said gamers are "well-served, if not overserved." Amazon is working to fix an awareness gap among consumers who may not know about or understand its gaming strategy, Gattis said.
FAQ
What did Microsoft Xbox announce on Thursday?
Microsoft's Xbox division announced Thursday it will test an advertising-supported method for streaming video games. Gamers participating in the Xbox Insider Program can join the test with a one-hour session limit, applying to games already in a user's library.
How much does Amazon Prime cost per month?
Amazon Prime subscriptions cost $14.99 per month. Amazon includes Prime Video in Prime subscriptions and announced plans to add the Luna cloud gaming service to its Prime Video streaming platform.
How many users does Amazon Luna have?
Luna has "millions" of users across the U.S. and 13 other countries. Amazon's gaming head Jeff Gattis said the company's goal is to reach 10 million to 20 million users "as quickly as we can."
