New Xbox Scarlett Cloud console likely to use Blockchain

Chris Stead 27 July 2018 NEWS

The rumoured streaming-only, “Netflix for games” console Microsoft is working on to use just announced Xbox blockchain technology.

Surely you’ve seen the rumour. The one about Xbox Scarlett Cloud. It’s unconfirmed, but take it as gospel: Microsoft will release a version of its Xbox Next console that is a streaming only device. That device is currently working under the title Scarlett Cloud.

The industry giant has been pointing to a streaming only console for a number of months now and if you link together the various strands of conversation and official comments, the intent is clear. Not only that, recent developments also point to a streaming console that utilises the blockchain. That’s the same revolutionary technology used to power cryptocurrencies like Bitcoin, Ripple and Ethereum, but it also has multiple other applications.

But first, an overview of the Xbox Scarlett Cloud.

Everything you need to know about Xbox Scarlett Cloud

Scarlett Cloud isn’t a piece of hardware, but instead the name of a platform. It exists much as any other cloud service we’ve come to know and accept in our daily lives, from Google Drive to Netflix, but leverages Microsoft’s existing Azure Cloud infrastructure. The Azure Cloud is a network of data centres that Microsoft has been assembling over the course of this decade all over the globe.

Azure would now have near complete penetration into the world’s major metropolitan centres, ensuring that platforms that leverage these data centres – like Scarlett Cloud – can operate in low latency environments. This is obviously critical to any form of game streaming, where latency is highly detrimental to play across the majority of popular genres. In particular, the first-person shooter.

According to the rumours, the Xbox Scarlett Cloud streaming box won’t be bereft of hardware. In order to further circumnavigate the issue of latency, enough processing power will remain on board the box to handle a low-level version of the game. In this way, elements like hit detection, image processing and user inputs will occur as they normally do. However, the hard yakka will be taken care of by the superior power hosted on the Scarlett Cloud platform.

This should ensure a smaller, more elegant console that is significantly cheaper than the price points we’ve come to expect in recent generations. With fewer moving parts, it should be less susceptible to breaking down, too. And perhaps most importantly, it should allow Microsoft to not sell the Xbox Scarlett Cloud device at a loss – a fact for previous generations – leaving more money available to invest in content.

Browse Game Pass

We only have to look back as far as the Microsoft E3 press conference in June 2018 to see Microsoft revealing its intent, adding strength to the rumour of the Xbox Scarlett Cloud. Notably:

  1. Phil Spencer, the head of Xbox, spoke during his keynote address of the company’s attention being drawn to streaming. He stated: “Our focus is on bringing console quality games that you see on TV or PC to any device."
  2. Prior to E3, at the DICE Summit, Spencer spoke openly about Microsoft’s acceptance of change. He said; “It was obvious Microsoft needed a reboot. Morale had hit a low, we were all massively frustrated we kept missing big trends. In some ways, it felt like real innovation was impossible.”
  3. In an interview with Business Insider in late January, Spencer said: “I’m bullish on Game Pass’ long-term potential to allow people to play the games they want on the devices they want. And I think that, as we continue to build the audience for Game Pass, our discussions with third parties will continue to grow.”
  4. Back to E3, and Spencer acknowledged publically for the first time that there is a new Xbox console on the way. He declared: “In this significant moment, we are constantly challenging ourselves: where can we take gaming next? The same team that delivered unprecedented performance with Xbox One X is deep into architecting the next Xbox consoles, where we will once again deliver on our commitment to set the benchmark for console gaming.”
  5. This past week just ahead of the Xbox Scarlett Cloud leak, Ubisoft co-founder and CEO Yves Guillemot has backed the idea of a streaming console, telling Variety: “I think we will see another generation, but there is a good chance that step-by-step we will see less and less hardware. With time, I think streaming will become more accessible to many players and make it not necessary to have big hardware at home. There will be one more console generation and then after that, we will be streaming, all of us.”
  6. EA also pointed to this future during its E3 conference. The company showed footage of console quality FIFA action streaming from the cloud and being played on a mobile device. EA’s chief technology officer Ken Moss said: “I truly believe it is going to revolutionize how games are experienced. We have watched it, studied it, have been working on it for a while now and we really believe that strong future is right about now.”

So why would Xbox Scarlett use the blockchain?

In the wake of the E3 press conference, Microsoft made a rather huge announcement that very few gamers seemed to notice. The company announced that it had moved all of its royalty payments for the Xbox ecosystem to the blockchain.

This replaced the previous manual, excel-driven method that was used beforehand – a method that took 45-days to process. By moving the tracking of all transactions within the Xbox ecosystem to the blockchain, not only could third-parties selling games through the Live Marketplace get real-time data on their product’s sales, but receive that revenue quickly and cheaply.

Tim Stuart, chief financial officer of Xbox, said in the report: “We are developing an ecosystem within the gaming industry that connects developers and publishers to game performance. Providing near real-time access to data greatly improves the process’ effectiveness and insights that lead to a more enriching experience for the partners.”

That was not all. Microsoft also revealed at the same time it had partnered with the mighty Ubisoft to use its Azure Cloud blockchain technology for the French company’s own in-house royalties distribution. So not only is Microsoft already using the blockchain to handle its in-house finances for Xbox, but it’s being leveraged by third-parties to handle their royalty distribution.

(For example, think of how every dollar that comes in to Ubisoft from Microsoft for Just Dance needs to be sliced up and send out by Ubisoft to all the music labels, sub-contractors and so forth.)

It’s clear that Microsoft has embraced the power of blockchain, and cryptocurrency, as a means of handling its financial back end. Smart contracts are a smart choice. It’s a good thing for gamers, too, as a closed, non-speculative environment for a cryptocurrency means a faster, cheaper and more secure transaction space. Which is exactly what you want and need if you are going to take your entire product into the world of cloud streaming as is planned with Xbox Scarlett Cloud. A world where traditional FIAT currency is redundant.

A further indication that Microsoft is shifting future consoles to a blockchain driven in-ecosystem currency was offered by general manager of finance operations at Microsoft, Grace Lao. She said: “Smart contract technology is far more flexible and scalable than any prior solution for managing business agreements. We look forward to deploying his solution across our gaming ecosystem and exploring additional blockchain applications for other finance processes at Microsoft.”

We dedicated an episode of our Video Games and the Blockchain TV show to it, which is worth a look for those who want to learn more.

When will Xbox Scarlett Cloud come out?

As this is only a rumour, we're still speculating on its existence, let alone its release date. However, it's fair to assume that the upcoming Xbox console - whatever it is - will not let the PlayStation 5 get a jump on it. We've seen a lot of evidence to suggest that the PlayStation 5 is earmarked for a November 2020 release date. With that in mind, you can pencil in a November 2020 release date for the Xbox Scarlett Cloud console, too. Just keep your eraser handy!

Xbox Scarlett Cloud is a compelling argument

When you join the dots between the Blockchain announcement and the streaming gaming service rumour in Scarlett Cloud, you have an extremely compelling distribution system for developers.

Developers will get data on sales in real time, get royalties paid near fee-free and on the run, and can have their titles play on any device with a screen (an unbeatable big install base). Meanwhile, consumers could have access to - and true ownership of - all of their games (and in-game characters and items) on demand no matter what device they are on.

Assuming Microsoft doesn’t over-reach with its subscription price or take too big a slice of the pie from studios, the Xbox Next would quickly become the first port of call for any content creator.

So that’s not just game developers, but filmmakers, music artists, streamers, eSports tournaments – anyone really. This topples the single biggest issue that’s held the Xbox One back: lack of consistent, varied, exclusive content – at least, relative to its competitors.

Xbox Scarlett Cloud and the blockchain could very well be a match made in heaven.

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