The Xbox 360 division at Microsoft does not feel in any way threatened by the rise of cloud-based computers like the recently revealed OnLive and Gaikai, believing that the current distribution model, focused on disk-based releases and downloadable content, will be central for the coming years.

Jerry Johnson, who is the boss of the European division of Xbox Live, told a BAFTA audience at the London Games Conference, that “Streaming technology is something that the industry is betting on longer term. Right now I don't believe that technology can scale out against the experience we can offer on a local machine.” He acknowledges that “The technology will continue to improve. As an industry we'll have to accept that” but “I don't think it's on an accelerated timeline for the foreseeable future.”

There are two high profile cloud gaming projects entering the initial beta stages at the moment: Gaikai and OnLive. Both of them are based around the idea that content can be delivered via the Internet rather than being stored on the computer on the player interested in it. OnLive aims to actually offer a subscription service that delivers old and new titles, while Gaikai just aims to create the technology and then allow developers and publishers to actually offer the content to interested gamers. During the winter, the two services will be getting beta stages that should tell us more about how they are holding up from a technical stand point.

Some analysts believe that the industry will reach a tipping point in 2014 when more content will be offered via DLC, digital distribution and streaming services than via disks, which will mean that even big companies will need to adapt their business model by buying smaller players on the market or by launching new hardware supporting streaming.