Microsoft is quietly testing a major pivot that could reshape cloud gaming. The company is internally trialing an ad-supported version of Xbox Cloud Gaming that lets employees stream games for free without Game Pass subscriptions. The move comes as Microsoft just hiked Game Pass Ultimate prices by 50% this week, signaling a dramatic shift in its gaming monetization strategy.
Microsoft just pulled a classic tech playbook move - raise subscription prices while quietly testing a free alternative. The Redmond giant is internally testing an ad-supported version of Xbox Cloud Gaming that could fundamentally change how people access games in the cloud.
According to sources speaking to The Verge, Microsoft employees are already streaming select titles for free without needing a Game Pass subscription. The catch? Two minutes of preroll ads before each gaming session begins.
The free tier isn't just a barebones demo either. Players can stream games they already own, dive into Free Play Days weekend trials, and access Xbox Retro Classics. Microsoft is currently testing one-hour session limits with a five-hour monthly cap, though these restrictions could change before public launch.
This strategic shift comes at a pivotal moment for Microsoft's gaming division. Just this week, the company hiked Game Pass Ultimate prices by 50% while simultaneously expanding cloud gaming access to new Premium and Essential tiers. It's classic subscription service math - squeeze premium users while building a funnel through free, ad-supported access.
The timing isn't coincidental. Xbox Cloud Gaming also officially exited beta status this week, with Ultimate subscribers now getting 1440p streaming at 30Mbps bitrates. Premium and Essential users are capped at 1080p with 12Mbps bitrates - creating clear performance tiers that justify the subscription hierarchy.
Microsoft has been telegraphing this move for nearly two years. Gaming CFO Tim Stuart first hinted at free Xbox Cloud Gaming in late 2023, while VP Jason Ronald recently told an Xbox podcast that cloud gaming needs to be "much more affordable" and "accessible to players."
