Microsoft To Reportedly Launch Free Xbox Cloud Gaming With Ads

Big changes are reportedly coming to the Xbox ecosystem, and this time, they might actually save you money. According to multiple sources, Microsoft is preparing to roll out a free, ad-supported version of Xbox Cloud Gaming, letting players stream select games without a Game Pass subscription for the first time.

It’s a bold move for sure, one that could reshape how gamers access titles across PC, consoles, handhelds, and the web. Here’s everything we know so far.

A Free Version of Xbox Cloud Gaming Is Coming

According to reporting from The Verge’s Tom Warren, Microsoft has begun internal testing of an ad-supported version of its Xbox Cloud Gaming service. The feature will allow players to stream select games for free without needing an Xbox Game Pass membership.

The free tier will reportedly work across all major platforms: PC, Xbox consoles, handheld devices, and browsers, with a public beta test expected soon and a full rollout planned for the coming months.

How It Works: Ads, Time Limits, and Game Access

The trade-off for playing without a subscription? Ads. Microsoft is currently testing around two minutes of preroll advertising before a free streaming session begins. Players can expect sessions capped at about one hour each, with a monthly total of up to five hours free – though these limits could change before launch. Here’s hoping, because that’s a bit of a buzz-kill otherwise. A nice way to “try before you buy”, but otherwise not so great.

Even with those restrictions, it’s a big shift for Xbox Cloud Gaming. The free version is expected to let you:

• Stream certain games you already own
• Access titles available during Free Play Days
• Play classic Xbox Retro titles through the cloud

Microsoft Gaming CFO Tim Stuart first hinted at an ad-supported plan nearly two years ago, and the company’s leadership has been clear that expanding cloud access is a major priority. As Jason Ronald, Microsoft’s VP of next generation, put it:

“I think for us, it really opens up the opportunity to make it much more affordable, and make it more accessible to players. Whether that’s going into new regions, or new ways to actually access the [Xbox] cloud.”

The Price Hike That Paved the Way

This move comes amid mounting criticism over rising Xbox costs. Microsoft recently raised the price of Xbox Game Pass Ultimate from $19.99 to $29.99 per month – a $120 annual increase.

To help justify the price bump, the company increased the number of day-one game releases to 75 per year and added new perks like Fortnite Crew and Ubisoft+ Classics. They also upgraded streaming quality as Xbox Cloud Gaming exited beta.

However, not all changes have been popular. Microsoft appears to have quietly removed the 10% DLC discount for Ultimate subscribers, replacing it with a new Rewards program. The company defended the price shift, saying the new $30 tier reflects “the expanded catalog, new partner benefits, and upgraded cloud gaming experience.”

New subscribers are already paying the updated price, while existing customers will see the increase kick in on November 4.

Game Pass: Growing Success or Industry Disruptor?

The timing of this free cloud initiative is no coincidence. Microsoft’s subscription model has faced criticism from developers and industry veterans alike. Former Arkane Studios founder Raphael Colantonio, whose game Weird West launched day-one on Game Pass, called the model “an unsustainable model that has been increasingly damaging the industry for a decade, subsidized by MS’s ‘infinite money,’ but at some point reality has to hit. I don’t think GP can co-exist with other models, they’ll either kill everyone else, or give up.”

Despite the skepticism, Microsoft says both “creator participation” and “player engagement” are at record highs, and the company claims Game Pass revenue hit nearly $5 billion this year, bolstered by titles like The Elder Scrolls: Oblivion Remastered, Doom: The Dark Ages, and Indiana Jones and the Great Circle.

Cloud Gaming Upgrades and New Pricing Tiers

Alongside the free streaming plans, Microsoft has revamped its Game Pass offerings. Game Pass Premium and Essential members now have access to Xbox Cloud Gaming for the first time, albeit with lower streaming quality than Ultimate subscribers.

• Ultimate members can stream in 1440p resolution with bitrates up to 30Mbps
• Premium & Essential subscribers are capped at 1080p and 12Mbps

Meanwhile, the cost of being an Xbox fan keeps rising elsewhere. Microsoft recently announced a $80 price tag for some upcoming games before walking it back to $70. Console prices have also gone up in the U.S. “due to changes in the macroeconomic environment.”

And the new handhelds? The upcoming ROG Xbox Ally X will cost a hefty $999.99, while the standard Ally is set at $599.99.

The Bottom Line

The upcoming free, ad-supported Xbox Cloud Gaming tier could be a game-changer, offering players a low-cost (or no-cost) way to stream games directly from the cloud, even without a Game Pass subscription.

With Microsoft under pressure over pricing and Game Pass’s long-term impact, this is a strategic pivot designed to expand access, build engagement, and lure new players into the Xbox ecosystem. Whether the trade-offs (ads, time limits, and content restrictions) are worth it will depend on how the final version looks when it launches.

What do you think of Microsoft’s new cloud strategy? Would you sit through ads for free game streaming, or is Game Pass still the better deal? Drop your thoughts below and stay tuned to Guys Gab for updates as Microsoft rolls out its public beta in the coming months.