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Speaking as someone who uses xcloud, i havent really noticed much lag, if at all. I have used the service on a wide variety of devices. A VCR XBO, a One X, the logitech GCloud, steamdeck and my work PC. in all cases it just works and works really well. I was not interested at first in the idea of streaming a game, but then i really started using it as a way to gauge interest if a game is worth my time of downloading/installing and I just cant help but jump into new titles when they drop. I used to do the same with new releases on netflix so i can see why they make that similar proclimation.
With Remote Play, the lag can be almost complete nonexistent too. My TV and Receiver glitched up really bad a few weeks ago and my Xbox wouldn't output through 4K 120hz for a few weird hours of power cycling these stupid devices, so I got to test this out while my Xbox just refused to output video through hdmi.
With a Backbone on my phone, and a controller connected to the console (hardwired into the modem through an Ethernet switch; my phone is connected to a Router that the modem routes to - so there is that extra network layer), I could not notice any difference. Avowed was set to the Balanced mode, maybe Performance would've exposed a lag with the extra frames but the response on my phone screen looked near exact from stick push to game response.
Cloud Gaming, playing something like South of Midnight feels responsive enough to me, and games like Pentiment you really really can't tell, and if you could, that's a game where lag would be inconsequential to the experience
I live in a city that has an Xbox Cloud server, and my local network uses Wi-Fi 6. I've used the service for quite a while. I can't really say I don't feel the latency. Some titles are completely unplayable for me, like Forza Horizon 5. But there are also many games where I barely notice it, such as A Crab's Treasure and Halo MCC.
Honestly, it's great that they're working on making it better. But the way it works right now is already pretty usable, and casual gamers, who I assume are the target audience, probably won't even notice the latency. The issue then becomes more of a commercial or marketing one, because casual gamers are either on mobile or console, and they probably don't even know Xbox Cloud exists, how much it costs, or how it works.
It also doesn't help that some of the most popular casual games aren't available on it at launch. Sports games from EA, for example, are always a couple of months late.
I get there are those who have no interest in streaming... I didn't at first, but then I got to testing out various games on different devices. I can't use my phone, screen is to small. I have used a 2013 VCR XBO to stream flight sim and it played surprisingly well. I also use a Logitech G-Cloud which is made specifically for streaming XB games as well as Nvidia Shield stuff. and that is what i primarily use now. I also have been using my living room One X to stream indiana jones and south of midnight. Both of which play great with little to no lag. then again i am using 1gb internet on a mesh network with the consoles wired in.
I never thought Id say this but... I really like the convenience of xcloud and PS+ premium and using the portal to play directly from the cloud as well. I get it, I get it... I will get major downvotes but this is my setup and my choice to do so. Everyone has the opportunity to do it themselves so you dont have to take my word for it.
It works for me.