The software titan is also negotiating deals with TV makers to include the new technology in their products, it said, according to Bloomberg.
Microsoft wants to place Xbox directly on internet-connected TVs so that users don’t need anything outside of a video game controller, it said.
Microsoft is also creating streaming devices that can send cloud gaming services to any TV or monitor, Bloomberg reports.
The moves could be motivated by the global semiconductor shortage that has created a shortage of the latest Xbox consoles.
“Cloud gaming is truly a breakthrough experience,” said Microsoft Chief Executive Satya Nadella. “It’s a really fast, easy way to get into gaming.”
Shares of Microsoft were recently rising 0.6% to $255.22, slightly more than the Nasdaq Composite’s gain on Thursday.
Last week, the company said it planned to unveil a new version of its iconic Windows software on June 24, according to an invitation sent to reporters.
“Soon we will share one of the most significant updates to Windows of the past decade,” Nadella said, according to The Verve.
In early April, Microsoft announced a $19.7-billion acquisition of Nuance Communications (NUAN) - Get Report, a healthcare-focused cloud and artificial intelligence provider based in Burlington, Massachusetts.