Ooh. Well, this is exciting. According to The Verge, Microsoft demonstrated a prototype game streaming service during an internal meeting yesterday. "Sources familiar" with the meeting claim Halo 4 was shown running on both a PC and a Windows Phone handset.
The service reportedly ran "smoothly on both devices," with latency of just 45 ms on the phone (which was apparently a Nokia Lumia 520). An Xbox controller "attached through an accessory" was used to play the game on both the Lumia and the PC. The Verge describes the PC used as a "low-end hybrid;" I assume that means a convertible tablet of some sort.
Don't hold your breath waiting for Microsoft to make an announcement, though. The Verge goes on to state, "Microsoft has not yet branded the cloud games service, and officials stressed it was simply prototype at this stage." Oh well.
The prospect of a game streaming service à la Microsoft is still exciting, though. Given the size and popularity of Microsoft's Xbox business, bringing triple-A console games to Windows tablets and phones could be a huge boon to the platform. Many low-power Windows devices are perfectly capable of running native games, of course, but the selection of native titles is small, and the tiny market share of Windows handhelds isn't exactly beckoning developers forth.
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