Microsoft is looking to the future, where it wants to be the Netflix of the gaming world. The goal is to create a game streaming service where gamers never have to buy a physical or digital game again; they simply stream whatever they want to play from the cloud. Analysts on Wall Street reckon that this is exactly what Microsoft needs to become a $1 trillion company.
"We see Microsoft building out the 'Netflix of Gaming,'" Morgan Stanley analyst Keith Weiss wrote in an investor note. "We think that gaming has historically been largely ignored, misunderstood, and undervalued by analysts and investors."
Weiss isn’t the only analyst that thinks streaming gaming is the next big thing for Microsoft, Jeffries analyst Timothy O'Shea thinks that Microsoft is on the cusp of developing this new streaming game business. He also figures that Google and Amazon are all working on cloud-based streaming video game platforms that will compete directly
O'Shea says that the new services from Google, Amazon, and Microsoft could expand the addressable gaming market by a factor of four and be available to anyone with a smartphone, laptop, tablet, or TV. Weiss thinks that Microsoft will be positioned well to take advantage of a shift in the industry as gamers move from consoles to PCs and mobile devices. The shift will pull gamers from one-time software purchases to subscriptions paid each month. The future of games also includes streaming, broadcasting, and mixed-reality, all pies Microsoft has fingers in already.
Microsoft's key advantage in streaming gaming is said to be Azure. "Azure is a key differentiator for Microsoft in the technology required to achieve streaming," Weiss said, adding that it "allows for developers to scale and customize gaming infrastructure on a reliable cloud." Weiss also thinks that Microsoft will change its Game Pass from serving only consoles and PCs to serving mobile devices. Weiss believes that Microsoft's revenue from Software and Services gaming should increase more than 80% in the latter years of his forecast period.