Microsoft has confirmed it is developing a free tier of Xbox Cloud Gaming. This ad-supported service is currently being tested and marks the first time the gaming platform will be available independently from Game Pass.
The initial beta version, known as xCloud, launched in November 2019 and was later rebranded as Xbox Cloud Gaming before becoming available in September 2020. Initially exclusive to XGP Ultimate subscribers, this service was expanded to include all Game Pass subscriptions, excluding the PC plan, in August 2025.
Microsoft Confirms Ad-Supported Game Streaming Test
The company is now working on an ad-supported iteration of Xbox Cloud Gaming. A spokesperson shared details with The New York Times, indicating the free platform is presently in internal trials. This supports earlier reports that certain Microsoft employees were granted access to this ad-supported tier since early October 2025.
Xbox Cloud Gaming Keyboard Mouse Setup is shown.
Microsoft has not provided additional information about its internal testing, leaving it uncertain how long these trials will last or whether they will result in a public release. In late 2023, the company’s CFO, Tim Stuart, suggested a free version of Game Pass that ultimately didn’t launch.
Is a Free Game Streaming Service Commercially Viable?
Cost estimates in recent documents suggest that operating Xbox Cloud Gaming costs about $0.03 per hour for a 60 fps experience at 1080p resolution. The service has since progressed to support 1440p streaming, which comes with higher costs.
Ad-Supported Xbox Cloud Gaming Tier Viability Scenarios
| Scenario | CPM | Ads/hr | Revenue/hr | Margin* |
|---|---|---|---|---|
| Conservative | $2 | 3 | $0.006 | -80% |
| Balanced | $8 | 3 | $0.024 | -20% |
| Optimistic | $12 | 3 | $0.036 | 20% |
| Aggressive | $20 | 4 | $0.08 | 167% |
*A cost of $0.03 per hour for 1080/60 fps gaming is assumed.
A study from Statista in November 2023 indicates that social media advertising costs range from $1.20 to $7.17 per 1,000 impressions. As such, a fully ad-supported Xbox Cloud Gaming tier might not achieve profitability unless Microsoft can secure premium CPM rates due to an engaged audience. If this tier is launched, it is likely part of a long-term strategy rather than an immediate revenue-driven project, functioning separately from Game Pass while incorporating features that allow gamers to bring their own titles.
