The concept of cloud gaming is nothing new. Most of us have heard of the ill-fated OnLive that was promptly bought and shut down by Sony. In fact, Sony themselves bought Gaikai and leveraged their streaming technology to introduce PlayStation Now. Nvidia threw its' hat in the ring with its GeForce Now game streaming service for PC gamers. Now it's Microsoft's turn...maybe. Today, the company unveiled a new cloud gaming division that is gearing up for a future where consoles are simply streaming boxes.

The new cloud gaming division will be lead by Kareem Choudhry, a 20 year veteran of the company with ties to some of Microsoft's biggest services such as Outlook and Xbox. Choudhry will report directly to Phil Spencer, the head of gaming.

In an interview with The Verge, Choudhry explained the genesis of new initiative:

“Phil really wanted a dedicated team focused exclusively on the gaming cloud," said Choudhry. “Those were conversations that started happening last summer, and we really started creating the structure of the organization at the end of last year.”

When Microsoft CEO Satya Nadella first took over the company, he stressed how Microsoft would become a "mobile first, cloud first" company in which Azure would drive Microsoft's future growth. The oft-delayed Crackdown 3 demonstrates this commitment by utilizing Microsoft's Azure cloud services to allow for fully destructible environments. Developer Ubisoft has also been relying on Azure to scale its multiplayer across PC, PS4, and Xbox One.

Microsoft already has Xbox Game Pass which the company has promised will get all future first party titles at launch, including the next Halo and Gears of War. Sea of Thieves is already the first big title to be released on Game Pass. Microsoft's grand scheme is likely to develop a "Netflix of gaming" service where you simply subscribe to Xbox Game Pass and play games in the catalog instead of shelling out $60 per game.

“What we’re doing with game pass and creating a subscription-based product, where over half the content is third-party content. I would say we’re getting started from a subscription product perspective," explained Choudhry.

However, something to that scale will not come easy and third parties will have to agree to a business plan that makes sense for them and Microsoft. Furthermore, access to high speed internet would have to increase for a service like this to work effectively. Imagine playing a twitch shooter like Halo and you miss a shot because your roommates decide to stream Netflix in 4K all at once.

The gaming industry seems to be moving towards a "games as a service" paradigm as game publishers try to find way ways to continue monetizing games after they've launched. If Microsoft can convince third party publishers to make new games available as a subscription service, gaming will have changed forever and Microsoft seems to think they have scale to pull it off.

“We’re really pleased with the success that’s happening [with Game Pass],” says Choudhry. “We continue to believe in user choice, and we also believe there’s room in the industry for a gaming subscription and that’s what we’re going to build.”