This should be game streaming’s moment. It’s not

Earlier this week, there was a ripple of excitement among long-suffering Xbox fans over news that the platform had struck an exclusive deal for the streaming rights to Grand Theft Auto VI – suggesting that while the game would launch on both PlayStation and Xbox, Microsoft’s Xcloud service would be the only place you could stream it, at least initially.

That turns out not to be true. Xbox Chief Strategy Officer Matthew Ball debunked the report, stating that “the game will not be streaming exclusively or to PC” – suggesting that not only will GTA6 be available to stream elsewhere (presumably on Sony’s cloud service), but there will also be restrictions in place for which client devices will be able to stream the game.

It’s fair to wonder if there was at least some kind of a smouldering ember generating the smoke for this report, even if it was mistaken in the end. The extent to which PlayStation has dominated the preorder numbers for GTA6, taking a share that’s outsized even proportional to the relative installed base of the consoles, is apparently a source of much consternation within Xbox. Figuring out some way to capitalise on the biggest game launch of the year should be a short-term priority for the division, and one would assume there are ideas being batted around to that effect – which sometimes results in those ideas breaking containment before anything is agreed upon.

Separately from the question of Microsoft’s travails with Xbox, however, this momentary flash of interest really turns the spotlight onto the question of streaming more generally. That’s because in theory, GTA6 could be the perfect storm for game streaming services – the moment when that entire sector gets its comeback story after years of under-delivery and disappointment.

Here we have the biggest gaming launch of the decade – possibly the biggest entertainmentlaunch of the decade – coming along at a moment when the console hardware required to play it is more expensive than ever. The RRPs for both the PS5 and Xbox Series X have been hiked significantly, and that’s only the thin end of the wedge. More than a month out from the actual launch of GTA6, we’re already seeing reports of stock shortages and scalper price gouging for console hardware, with PS5 Pro in particular being offered at hundreds of dollars above RRP in several places.

This is exactly the kind of situation that we’ve been told for over a decade will be solved by cloud streaming

This is exactly the kind of situation that we’ve been told for over a decade will be solved by cloud streaming. An absolutely massive audience potentially facing lockout due to prohibitive hardware pricing and availability issues – this is the kind of scenario executives used to cook up to justify investment in cloud gaming services in the first place (if only because “we hate the concept of consumers ever actually owning anything” is a harder sell in a keynote speech). Instead of consumers duking it out with scalpers to try to get their hands on an overpriced piece of hardware, in this ideal world of streaming they would simply spin up an instance in a remote datacentre and be playing their purchased game in seconds, with the hardware being freed up for the next player as soon as they stop.

In that situation, the exclusive rights to stream GTA6 would certainly be a major coup, but even the very possibility of GTA6 being streamed to players who couldn’t justify a console purchase for it (or perhaps couldn’t even find a console to purchase) should be a huge shot in the arm for that whole distribution paradigm.

Yet in truth, there wasn’t much interest in the potential for GTA6 as a streamed title until the moment where it – briefly – had a console war spin to it. It’s not actually entirely clear what streaming options will be available for players at or around launch, though Ball’s statement is quite specific about streaming to PC not being on the table – which instantly undercuts a fairly major part of the potential appeal, as it essentially means that the only people who can stream GTA6 will be the people who already own hardware that can play GTA6 natively.

Rather than being a coup for anyone, this feels like it might actually be another nail in the coffin of game streaming as a meaningful distribution method

Rather than being a coup for anyone, this feels like it might actually be another nail being tapped into the coffin – the deceased in question being the whole notion of game streaming as a major pillar for the industry. It’s already been a rough year on that front, with Microsoft recently announcing that it was placing strict caps on streaming usage for Game Pass subscribers. That announcement wasn’t the rough part; the sound of crickets and tumbleweed which greeted it was, showing just how few consumers were affected or cared about the changes.

In truth, the enthusiasm for game streaming was one-way for a very long time. Some companies – especially companies who wanted to rent out cloud infrastructure and companies who liked the idea of turning every one-off game purchase into a recurring revenue stream instead – were very keen on pushing game streaming as the inevitable future, while consumers largely wavered between caution and overt negativity towards the whole idea.

Now the one-way street is closed for roadworks as well, because the data centre operators have found a much more lucrative line of business in renting out compute for AI systems – or at least in playing pass-the-parcel with giant wads of cash and various vague promises to fill as-yet-unbuilt facilities with GPUs at some point. The need to drum up data centre business by promoting game streaming services has dissipated.

Now that the huge vaults of growth capital have dried up, it’s hard to ignore that streaming’s numbers don’t add up

With it has gone the fig leaf over what was always a pretty questionable business model. Like many business propositions that are aimed at growth rather than sustainability, game streaming services tended to make profit projections that conveniently ignored long-term costs – like how rapidly hardware being used for gaming 24/7 would fail and need replacing, or how quickly it could become obsolete. Now that the huge vaults of growth capital that could enable that kind of blasé approach to costs have had their roving eye drawn elsewhere, it’s hard to ignore that the numbers don’t add up – and consequently, the drive to promote this whole sector has shifted into neutral.

It’s ironic, perhaps, that the perfect moment in which game streaming could actually have made an impact is arriving at a time when nobody in the industry is especially keen to take advantage of that moment. Yet the two things aren’t unrelated: this is the perfect opportunity for streaming precisely because the giant boom in data centre construction has wrecked the hardware component market and priced many consumers out of console and PC hardware updates. The architect of the opportunity is also the reason why nobody cares to take advantage of it.

It will, at least, be worth remembering this in years to come, when the arguments claiming that game streaming is the industry’s inevitable future come circling around again. GTA6 is launching into a market where console hardware is overpriced and facing sporadic scarcity, while game streaming technology is mature and ready. If it doesn’t happen now, it probably won’t happen ever – and all the signs suggest that it’s not happening now.