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Microsoft's cloud vision might just change gaming forever

Microsoft's cloud vision might just change gaming forever

Good morning! This Friday, Microsoft is bringing Game Pass to a TV near you, SoFi backtracks on dogecoin, Klarna raised $639 million, hackers stole 780 GB of data from EA, and the hot new look for summer is Elizabeth Holmes swag.

Also, did you hear about Protocol | Workplace? It's our new vertical, launching June 23, and you can sign up to get our first newsletter in your inbox as soon as it's live.

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The Big Story

Kill the console

Few business models are more lucrative than recurring monthly subscriptions, and yet the video game industry has resisted them for decades. Since 2017, Microsoft has harbored ambitions to change that with Xbox Game Pass, an all-you-can-play software library launched that year that costs between $10 and $15 a month and features more than 300 games.

Game Pass wasn't the first subscription service in gaming; we've had individual game subscriptions since the '90s, and newer models like seasonal battle passes have popularized recurring in-app purchases. But Game Pass has become the most ambitious model to date and the closest to a true "Netflix for gaming." And it's about to become a whole lot more accessible.

Microsoft announced major expansion plans for Xbox Game Pass yesterday that promise to bring that all-you-can-play game library to many more screens.

  • Microsoft says it's working with device manufacturers to build Game Pass directly into smart TVs, so the subscription service can be accessible with just a controller, no extra hardware required.
  • Even more ambitious are the company's plans to build its own streaming devices, perhaps similar to Google's Chromecast or the Apple TV, that could also enable access to Game Pass with just a controller.

The cloud is the center of this vision, in particular Microsoft's existing yet still-in-beta cloud gaming platform previously known as xCloud. Less powerful hardware, like streaming set-top boxes and smart TVs, would require the cloud to stream console-quality games.

  • Now called simply Xbox Cloud Gaming, Microsoft's cloud gaming platform is available on Android phones, the iPhone and iPad, and web browsers to select subscribers of Microsoft's $15 Game Pass plan.
  • Microsoft is planning to expand access to the web browser version of Game Pass to all Ultimate plan customers in the coming weeks. Cloud gaming is also launching in new countries later this year, including Australia, Brazil, Mexico and Japan.
  • Microsoft says it's updating the data centers that power the cloud gaming service with new Xbox Series X hardware to improve performance. It's also launching a version of the service within the Xbox app on PC and on its consoles to make it easier to try games instantly before a player decides either to download or buy them.

Microsoft could fundamentally change the gaming market with an Xbox business oriented around Game Pass, ushering in the kind of paradigm shift that subscription streaming services like Netflix and Spotify brought to the TV and music industries. But only if Microsoft succeeds in convincing gamers to come aboard.

  • Xbox games could conceivably become accessible from almost any screen, anywhere, at any time. The approach, and a shift in its business model, could also reduce Microsoft's need to compete directly against Sony's PlayStation or the Nintendo Switch.
  • Microsoft hopes its position in the cloud computing, gaming and desktop operating system sectors make it uniquely capable at delivering a streaming subscription platform and product experience of this scale where others, like Google Stadia, have struggled.
  • A key selling point of Game Pass will be access to Microsoft's first-party games, including Halo: Infinite and new games from its Bethesda subsidiary, the day they release, for no extra cost. Microsoft is expected to reveal more about its upcoming releases Sunday during its E3 2021 showcase.

Microsoft doesn't have an easy road ahead of it. It's not clear what the long-term effects of its subscription push will mean for funding blockbuster games, and whether the economics of the industry can sustain such a model without widespread adoption from other publishers. It's also not a given that most consumers even want a game industry dominated by yet more subscription services. But Microsoft is gambling the future of Xbox on this vision of the future, and on ensuring it gets there first.

— Nick Statt (email | twitter)

A MESSAGE FROM AMAZON

It's not just Amazon employees who experience the benefit of increasing their starting wage to at least $15 an hour — a recent study from the University of California-Berkeley and Brandeis University found that when Amazon raised wages, the average hourly wage in the surrounding area rose by 4.7%.

Learn more

People Are Talking

An upcoming bill could require companies to report cyberattacks to the government, Sen. Mark Warner said:

  • "When we had this debate six or seven years ago, the business community did not want any additional mandatory reporting. I think they now realize that they themselves are put in jeopardy if they don't have mandatory reporting."

On Protocol | Fintech: Regulators catching up with fintech would actually be a good thing for fintech, Affirm's Max Levchin said:

  • "If the regulators would like to spend more cycles understanding who's good and who's bad in this space, and what the norms should be, what behaviors should be normalized and what behaviors should be outlawed, I certainly welcome these. I think it wouldn't be the worst thing for the industry."

Ransomware is a huge and growing concern, FBI Director Christopher Wray said:

  • "We think the cyber threat is increasing almost exponentially. Ransomware alone, the total volume of amounts paid in ransomware has tripled over the last year, we're investigating 100 different ransomware variants."

SoFi in February: out on dogecoin. SoFi now: super into dogecoin.

  • "We weren't so sure about Dogecoin for trading on SoFi Invest, given concerns about availability with our partners, network stability, and acceptance, among other things. But since then, we have re-evaluated the coin, which has evolved in significant ways. Long story short: We heard you, and we are excited to now offer Dogecoin on SoFi Invest."

On Protocol: Monday.com had a big IPO, and co-CEO Roy Mann said the opportunity for future-of-work tools is bigger than you think:

  • "Most of the work we were doing today is analog. Meetings are not recorded, people take notes on notepads. A lot of those things are really repetitive and create a lot of energy loss … we couldn't be a Work OS without enabling people to build the software they want."

Making Moves

Waymo is getting further into trucking. It made a deal with JB Hunt to autonomously carry cargo in Texas, though there will still be humans in the truck in case they're needed.

DiDi is going public, and could be one of the biggest tech debuts for the rest of 2021. Here's everything you need to know about the IPO.

Klarna raised $639 million from SoftBank and others, and is now valued at $45.6 billion. That puts it among the handful of biggest private startups in the industry.

Ulrich Kranz is joining Apple to work on cars. Kranz was a longtime BMW exec, and co-founded Canoo a few years ago. He'll report to Doug Field.

In Other News

  • The pay gap between CEOs and workers is widening fast. CEOs in a New York Times survey made 274 times as much as the median employee at their company, and pay at the top increased 14.1% last year compared to 1.9% for median workers.
  • EA was hacked. Source code (not to be confused with Source Code) from big games such as FIFA 21 and the engine that runs Battlefield were stolen, Motherboard reports. The hackers said they took 780 GB of data. No word yet on whether any terrible Ultimate Team records are out there for the public.
  • The big-money NFT auctions continue. Another CryptoPunk — the low-res digital avatars that have become the most stable NFTs on the market — sold through a Christie's auction for about $11.75 million.
  • The Trump DOJ subpoenaed Apple for data on Democrats. At least a dozen people had their records seized, The New York Times reported, as the administration tried to identify the sources of classified leaks. Apple was only able to inform them last month.
  • Amazon will pay $62 million to settle with the FTC over allegations that it didn't give Amazon Flex drivers their full pay and tips.
  • Right-to-repair legislation passed the New York Senate. There are still a lot of roadblocks left, but as Vice points out, it's the first time a U.S. legislative body has passed such a bill.
  • Google is trying to keep online slander out of search results. It's changing its algorithm to keep sites like PredatorsAlert.us out of results when you search someone's name.
  • Amazon plans to let employees work remotely two days a week. The company has been pretty vocally in favor of bringing people back to the office, but seems to be realizing that not all employees want that.
  • A new Biden administration task force will develop a strategy for providing vast troves of government data on American citizens to AI researchers, as part of an initiative to maintain American competitiveness with China and other countries.
  • Theranos swag is a best-seller. Seriously. Ahead of Elizabeth Holmes's trial, a cottage industry of Holmes- and Theranos-related stuff is selling like crazy on Etsy and going viral on TikTok.
  • AI chip designers are taking over at Google. The computers are designing the computer chips, and they're doing it very well, and if that's not the surest sign yet of the Singularity, we don't know what is.

One More Thing

Twitch's founder on making it big in tech

Emmett Shear's tweetstorm on lessons he's learned since Twitch launched 10 years ago has been rattling around the tech industry for the last couple of days. If you haven't seen it, give it a read (here's the Threader version). Shear gets into product-market fit, paying attention to customers versus competitors, planning and more.

There's plenty of good advice, and a few pillow-embroiderable phrases, but none better than this one: "Plans are useless, but planning is essential." How's that for something to have rattling around in your brain all weekend? You're welcome, friends.

A MESSAGE FROM AMAZON

Kimberly thinks Amazon is "setting a good example for not only Florida, but every other state where the minimum wage is below $15/hr." That's because she has seen the difference $15/hr has made for her, her family, and her community.

Learn more

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