Microsoft killed the ‘Keystone’ Xbox Streaming Stick because of its high price

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Rumors swirled last year that Microsoft would release a streaming stick for its Xbox Cloud Gaming service, but it didn’t happen. The canceled piece of hardware made an unexpected cameo in a photo posted by Xbox boss Phil Spencer, though it won’t be on store shelves. And even if it were, you probably wouldn’t have bought it. According to Spencer, the “Keystone” streaming device was canned because it seemed to be getting too expensive.

Before getting out of the cloud gaming race, Google capitalized on the popularity of the Chromecast to bring Stadia games to the big screen. On Microsoft’s side, the Xbox is the only way to do that, and if you already have an Xbox plugged in, why not play a higher quality local game? To bridge the gap, Microsoft started work on the Keystone dongle.

Despite the small size of the device, it started to be an expensive piece of hardware. On The Verge’s Decoder podcast, Spencer explained that Microsoft should have charged between $99 and $129 for Keystone, and that bundling a controller would have brought the cost close to $200.

Even in a vacuum, $200 for a game streaming bundle is a lot. Google offered a Stadia streaming kit with a controller and Chromecast Ultra for $130, but Google didn’t have a game console to worry about cannibalizing. Microsoft’s Xbox Series S is just $299, sometimes going even lower on sale. As long as Microsoft has a full console priced this low, there’s no point in offering a streaming stick that costs over $100.

The Series S costs just $299, which was deemed too close to Keystone’s expected price. (Photo: Louis-Philippe Poitras/Unsplash)

Microsoft is increasingly leaning on its Xbox Game Pass service to monetize its legions of gamers. Cloud gaming is included in the high-end Ultimate plan, but is still labeled as a “beta” service by Microsoft. Most Game Pass content comes in the form of downloadable content for PC and Xbox. Microsoft has expanded its lineup of game publishers with the acquisition of Bethesda and the pending deal to include Activision Blizzard. Spencer has said that Microsoft’s first-party content will launch on Game Pass as soon as it’s released, but cloud gaming is still only available on a fraction of Game Pass titles.

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