Xbox Testing Ad-Supported Game Streaming; Amazon Integrating Luna into Prime Video
Xbox is testing ad-supported cloud game streaming, offering one-hour sessions for games users already own. Luna, on the other hand, is getting a Games tab in Prime Video alongside Movies and Sports for all Prime subscribers.
Google Stadia ended its run in 2023, as both Xbox and Amazon acknowledge that their initial cloud gaming strategies haven’t gained traction.
Microsoft and Amazon have announced new cloud gaming approaches on the same day, reflecting their shared realization that the category hasn’t reached anticipated audiences.
Xbox’s approach mirrors Netflix’s strategy: introducing an ad-supported tier to attract users by lowering price barriers. This test could lead to a future ad-supported Game Pass. Xbox CEO Asha Sharma has already implemented price cuts, unveiled a next-generation console for 2027, and laid off 20% of the division’s workforce this month.
Amazon, instead of competing with PlayStation or Xbox, is placing Luna where people are already: within Prime Video. While Luna had "millions" of users across 14 countries, it struggled with awareness issues. Amazon’s gaming head, Jeff Gattis, states that gamers are "well-served, if not overserved," and Luna targets casual players interested in trying titles like Harry Potter or Tomb Raider without buying a console.
A significant challenge for cloud gaming remains latency, the physics of streaming interactive content over inconsistent internet connections. Both Xbox and Amazon are reassessing their strategies after Google Stadia’s failure, acknowledging that radical changes may be needed to overcome this fundamental obstacle.
Users pushed back against aggressive changes by Google when it rebuilt Search around AI, and there’s a risk ads in game streaming could stir similar backlash, prompting EA and Take-Two to remove in-game advertising due to player outrage.