We already know that Microsoft is working on the next generation of their console and it has been previously reported that there will be multiple versions. Microsoft has not confirmed any details, but reports surrounding the follow-up to the Xbox One have begun to spring up online in recent weeks.
The new console codenamed Scarlet will come with two distinct devices for its next generation of game consoles. The first will be a traditional box in the vein of the Xbox One and Xbox 360.
The second device is the one that may be more interesting, it is believed to be a lower cost model, codenamed Scarlett Cloud and as the name would suggest it is going to be a cloud-based console. It will be built around a game streaming service which was first shown off at an employee-only meeting a few years ago.
The cheaper model won't be as powerful as the main version but that it will be able to play all of the same games as the new service. The cloud console will have a limited amount of computing locally for specific tasks like controller input, image processing, and importantly, collision detection.
With the growth of streaming and cloud-based services in every other aspect of our life with a focus on monthly subscriptions rather than one-off payments, as well as some game streaming services already existing, it makes sense that Microsoft will be shifting their model to a cloud-based approach. They will be able to distribute their hardware to a wider range of people while ensuring a regular flow of money through monthly payments.
As it currently stands Microsoft’s game-related services are often more profitable than its hardware. For better or worse I would say it is inevitable all gaming will go this way.
There is no release date for the new consoles, but it could be as early as 2020 and it is likely that we won't see games like Starfield or The Elder Scrolls 6 until the new consoles are released.