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Microsoft already said it is working on the next version of its Xbox console. But now a new report reveals some of the company’s plans for not just one, but two new devices — including a lower-cost option powered by Microsoft’s cloud streaming service.

Brad Sams at Thurrott.com reported Monday that in addition to a traditional new Xbox, Microsoft will sell a cheaper “streaming box” designed to work with its previously-announced streaming service.

Sams said the streaming box, codenamed “Scarlett Cloud,” would run games both locally and in its Azure cloud — also known as slice or splice. This would apparently help reduce poor latency that gamers experience with cloud-based services.

Sams notes that Microsoft makes a bulk of its gaming revenue on subscriptions and game sales, versus hardware. “If Microsoft can create a next-gen console that requires lower up-front payment and longer subscription payments (remember, all games will run in the cloud, so you will need to pay ‘something’ to access them), this is a huge win for Xbox and Microsoft,” he wrote.

Microsoft has been investing in AI and cloud resources related to gaming technologies. Speaking at E3 last month, Xbox chief Phil Spencer said the company is building a “game streaming network to unlock console-quality gaming on any device.”

“We are dedicated to perfecting your experience everywhere you want to play: on your Xbox, your PC, or your phone,” Spencer noted.

As the gaming industry moves toward cloud-based infrastructure, it may reduce the need for a high-powered console. Other gaming giants like Sony, EA, and Nvidia are also building cloud-based game streaming services.

Microsoft’s cloud division continues to be one of the primary architects of its comeback in recent years. The Intelligent Cloud division posted revenue of $9.6 billion during the three-month period ending June 30th.

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