Cloud gaming was once billed as the future of the industry, letting players stream any game instantly without owning a console or PC, but nearly two decades on the technology still hasn't lived up to that promise. Microsoft's decision to impose monthly time limits of 5-15 hours on Xbox game streaming, announced last week, signals that even the best-resourced companies are struggling to make the model financially sustainable, raising doubts about whether cloud gaming can ever truly succeed as promised.

Early cloud gaming pioneers fared badly: OnLive folded within a year of its 2011 launch, and Google's Stadia shut down in 2022, three years after launching, while Sony bought Gaikai for $380m in 2012 and folded its tech into PlayStation's streaming features. Although input lag, once the technology's biggest flaw, has largely been resolved, streaming now faces a costlier problem: an hour of game streaming uses around 4GB of data compared with roughly 1GB for an hour of Netflix, making it expensive to run. The article notes this is compounded by AI companies' surging demand for computing power and energy, which has driven up the cost of data infrastructure rather than the cheaper future the model relied on.