Exclusive: Microsoft continues to iterate on an Xbox cloud streaming device codenamed 'Keystone'

For a few years, rumors have persisted that Microsoft was exploring building some form of streaming stick to offer Xbox Cloud Gaming via a more affordable dongle, similarly to Chromecast and Google Stadia. The first hint was Project Hobart. More recently, a code name "Keystone" appeared in an Xbox OS list, lending fire to rumors that Microsoft was continuing to explore additional hardware for the Xbox lineup. 

We can now confirm that that is indeed true, and it pertains to a modernized HDMI streaming device that runs Xbox Game Pass and its cloud gaming service. Microsoft is, however, taking some time to explore additional iterations of the product before bringing it to market. 

In a statement provided to Windows Central, a Microsoft spokesperson described its commitment to lowering boundaries to Xbox content via low cost-hardware, while acknowledging that the existing version of Keystone needs a little more time to bake before going live.

“Our vision for Xbox Cloud Gaming is unwavering, our goal is to enable people to play the games they want, on the devices they want, anywhere they want. As announced last year, we’ve been working on a game-streaming device, codename Keystone, that could be connected to any TV or monitor without the need for a console," a Microsoft spokesperson stated.

"As part of any technical journey, we are constantly evaluating our efforts, reviewing our learnings, and ensuring we are bringing value to our customers. We have made the decision to pivot away from the current iteration of the Keystone device. We will take our learnings and refocus our efforts on a new approach that will allow us to deliver Xbox Cloud Gaming to more players around the world in the future.” 

From what we understand, Keystone has been in development for a couple of years, with Microsoft continuing to finalize the product's feature set.

To speculate, Keystone could eventually run some sort of slimmed-down Windows or Xbox OS, given that "Keystone" originally appeared in an OS list alongside the different Xbox platforms like "ERA" and "GameOS." Utilizing Windows instead of alternatives like Android would allow Microsoft to offer its own streaming media apps like Microsoft Movies & TV. Although, using Android OSP would potentially be a quicker route to market, leaning on apps like Netflix, and perhaps Spotify.

The exact timeline for Keystone remains unclear, but I wouldn't expect to see it any time soon — particularly not at the Xbox and Bethesda Showcase coming up on June 12.

A low-cost streaming device makes obvious sense from a business perspective, as Microsoft pushes to bring Xbox Game Pass to more households who perhaps aren't interested in owning a full-blown console. Microsoft has also previously hinted at bringing TV apps for Xbox Cloud Gaming as well, which would lower the barrier even further.