Microsoft’s Xbox streaming console ‘Keystone’ was pushed back because of its price

“It was more expensive than we wanted it to be when we actually built it out with the hardware that we had inside,” said Spencer, discussing the Keystone prototype device that recently appeared on his office shelves. “We decided to focus that team’s effort on delivering the smart TV streaming app.”

Microsoft delivered an Xbox TV app in partnership with Samsung instead, but it doesn’t mean the idea for a streaming-only Xbox console is fully over. “With Keystone, we’re still focused on it and watching when we can get the right cost,” reveals Spencer.

Microsoft wanted to aim for around $129 or $99 for this Xbox streaming device, says Spencer, and hints that bundling a controller with the streaming console, as well as Microsoft’s silicon component choices, had pushed the price up closer to the $299 Xbox Series S.

The choice to bundle a controller matches what Microsoft traditionally does with its Xbox consoles and was also Google’s original approach to putting its discontinued Stadia cloud gaming service on TVs. But a cloud gaming TV stick or puck could support any controller you have if the hardware supports Bluetooth, so it’s interesting Microsoft specifically wanted to bundle an Xbox controller, likely to make the user experience feel more seamless.

Indeed, Spencer says the Keystone prototype “looks like an Xbox with the user interface and everything works.” Now the device is just hanging out on his shelf in the office. “The reason it’s on my shelf is because the team rolled up their sleeves, and in nine months, they built that thing,” says Spencer. “A bunch of us took it home, and it worked. It worked really, really well.”

Now it looks like it’ll be quite some time before we see anything similar. “Will we do a streaming device at some point? I suspect we will, but I think it’s years away,” said Spencer in a recent Wall Street Journal live conference.