Upon Microsoft’s public announcement of plans to acquire Activision Blizzard, discussions on the console war between PlayStation and Xbox were heated again. Some people regarded platform exclusivity of more games would build Xbox’s edge over PlayStation, while others felt relieved after Xbox head affirmed future releases of Call of Duty on PlayStation. However, both sides have underestimated Microsoft’s ambition.

Sony no doubt sells more consoles in the last and current generation, and has arguably stronger exclusive franchises till now. However, Microsoft is really aiming to reshape the entire video game industry, which could pose a fundamental threat to PlayStation’s current business model.

Business Philosophy

Let’s start with the differences in business philosophy between PlayStation and Xbox.

PlayStation: Consoles + Exclusive Games

PlayStation maintains a business model of selling consoles and games in its history. To be more precise, there are two major goals in this model:

  1. Drive more people to buy its game console of the current generation
  2. Attract users to buy more exclusive first-party games

which is a typical closed ecosystem adopted by Nintendo as well. This conservative approach has demonstrated its success in the past years, for which Sony doesn’t seem so worried about responding to Xbox’s transition to a subscription model. And Sony is expected to maintain this model even after PlayStation is reported to plan a new service codenamed Spartacus that we’ll talk about later.

Xbox: Subscription + Cloud

Before discussing anything about Xbox, we need to mention the CEO who has basically transformed Microsoft. As a successor to Ballmer, Satya Nadella has led Microsoft since 2014 and successfully built up its position in cloud computing against Amazon and Google. Azure proved to be a great commercial and technological success as well as the cornerstone for almost every other business in Microsoft.

Formerly profiting from selling operating system and software licenses, Microsoft is more a company that provides platforms and services, reflected in Azure, Office and its acquisition of LinkedIn and GitHub. And Xbox is no exception. Launched in 2017, Xbox Game Pass has gained over 25 million subscribers from both PC and consoles. xCloud has made its debut on PC, mobile and consoles as well. It should be clear that Xbox is heading toward a business model of subscription and cloud gaming.

Tech War behind Cloud Gaming

For Sony, there is not much to say about technology, but Microsoft is definitely one of the leaders in cloud computing. Aside from its experience in virtualization and computational resource management, expertise in network engineering would play a major role in cloud gaming, which is extremely latency-sensitive.

We can identify three basic requirements in the success of cloud gaming:

  1. Contents (i.e., an attractive library of games)
  2. Infrastructure and expertise in cloud computing
  3. Experience in network latency optimization

There are currently four major cloud gaming service providers in the market now, namely Google Stadia, Nvidia GeForce NOW, PlayStation Now and Microsoft xCloud. Among them, Google is very strong in both cloud computing and networking, but has a fatally lackluster library of games. Nvidia is faced with similar problems when many game publishers pulled their games from GeForce NOW. Amazon Luna, a newcomer to cloud gaming, is also expected to bother with them despite its partnership with Ubisoft.

PlayStation owns a great variety of first-party games, but Sony is by no means a match in cloud computing and networking compared with those tech giants. Even though Sony is borrowing computing and networking infrastructure from major cloud service providers, the immense gap in engineering will enable Microsoft to take first moves. Finally, Microsoft xCloud is the only one that satisfies all of the three conditions.

As a corollary, up to now the single company that might be able to threaten Microsoft in this industry is Tencent. However, the following factors are blocking Tencent from actually becoming a global competitor in cloud gaming:

  1. Tencent is still focusing its target market on China, without much success in internationalization
  2. The library of Tencent game titles is significantly different from others in terms of game category
  3. The unstoppable escalation of U.S.-China conflict

Differences in Strategy

In this part, we’re going to elaborate on the different strategies adopted by PlayStation and Xbox.


As we mentioned before, Sony is still committed to the transition to its PS5 console and the release of exclusive games. PlayStation provides two optional subscription-based services currently: PS Plus and PS Now.

PS Plus is generally considered an equivalent of Xbox Live Gold, in terms of both perks and prices. Both of them are sold at \$10 per month, providing online multiplayer functionality and monthly free games. PS Plus got a major booster of famous game titles from the recent release of PlayStation Plus Collection, which made PS Plus much more appealing than Xbox Live Gold. However, it is only available on PS5 consoles, from which it is reaffirmed that Sony is trying to push its new console rather than trying to make PS Plus a serious rival to Xbox Game Pass. Besides, none of the titles is day one release, so the audience is mainly constrained to newcomers to PS5.

PS Now is a service featured by game streaming sold at another \$10/mo. with some of them downloadable on PS4 Pro or PS5 consoles. Compared with PS Plus as a must-buy for online multiplayer games, PS Now has a substantially smaller subscriber base due to older and less competent games. Games prior to PS3 are stream-only for architectural reasons, and as for PS4 games the download option is only available on specific PS consoles. Thus PC gamers are subject to stream-only play experience through PS Now.

Obviously, PS consoles remain the major concern of Sony. Even PlayStation showed limited interest in the PC platform by porting some of its major exclusives, none of the titles is a day-one release. In the foreseeable future, it’s fair to say that the situation won’t change much even in light of the rumored Spartacus.


Most would agree that Xbox Live Gold is being phased out, scheduled to be replaced by Xbox Game Pass. Xbox Game Pass is yet another piece of proof that Microsoft is transitioning to platform- and service-based businesses. Xbox Game Pass could be further divided into separate services including Xbox Live Gold, Game Pass for Console, PC Game Pass and additional EA Play. The first feature that makes Xbox Game Pass stand out is multi-platform launch. PC gamers can get most services and perks offered to Xbox consoles through Game Pass, which clearly indicates that Microsoft is no longer pursuing more console sales. The second one is day-one release of first-party games via Game Pass across PC and console, another dividing line between Xbox Game Pass and PS subscription services.

From the way Microsoft runs Xbox Game Pass, it is selling the Game Pass as a service rather than consoles or individual games. But even the Game Pass is not the long-term goal. While Game Pass offers downloadable titles on both PC and console currently, xCloud is launched on a wider range of platforms including mobile devices. Not only many first party games be launched on xCloud, but indie games may also benefit from a larger user base and cloud gaming. Xbox Game Pass provides a large base of contents to play, while xCloud builds up the technology for cloud gaming.

For the time being, Xbox merely seems to be a direct challenger of PlayStation. In the long run, however, it might bring a radical revolution for the entire video game industry by redefining how people would play video games.

Is Spartacus a Serious Response to Xbox Game Pass?

According to the report from Bloomberg, Sony is rumored to plan to respond to Xbox Game Pass by releasing a revamped PS Plus service codenamed Spartacus.

Spartacus is reported to be divided into three different tiers. The first tier would match the existing PS Plus with similar services. The second is reported to “offer a large catalog of PlayStation 4 and, eventually, PlayStation 5 games.” The third one is mostly a combination of the current PS Plus and PS Now. A reasonable guess of pricing is that Tier 1 would match \$10/mo. for existing PS Plus, Tier 3 would be priced at the sum of PS Plus and PS Now (i.e., \$20 per month) and Tier 2 falls between them at \$15/mo.

Considering the current PS Plus is no match for Xbox Game Pass and the extra contents in Tier 3 doesn’t seem to justify the premium, Tier 2 seems the most likely true competitor against Game Pass. But taking account of the fact that most PS4 blockbusters are already part of the PS Plus Collection, it is difficult to expect any strong title folded in Tier 2. Anyway, Sony seems not ready for either day-one releases or full PC support. If this is the case, Tier 2 would perhaps include a larger library of PS4 games with no or limited PS5 games and that’s all, which is better called a rebranding rather than a serious rival against Xbox Game Pass.


COVID-19 reshaped the world and many industries. Video game industry is one of them, with cloud-based services like Xbox Game Pass growing faster than any other period. Game Pass imposes an unprecedented pressure on PlayStation directly and other video game companies in the longer run. Although nothing can be said for certainty, Microsoft is indeed leading in the industry and on its way to redefine the way that people play video games. It remains to be seen whether and how other competitors in this industry would respond to the challenges arising from new technology.