When Walmart and Microsoft announced they had entered into a strategic partnership for wider use of cloud and artificial intelligence technology, everyone stated the obvious: Two major rivals of Amazon are coming together to collaborate on a competitive strategy. While Walmart continues to expand its e-commerce presence to better compete with Amazon, Microsoft has been working on a technology that would eliminate cashiers and checkout lines from stores.

But it doesn’t stop with commerce; Walmart is working with veteran television executive Mark Greenberg on a subscription video-streaming service that would contend with Netflix, Hulu, HBO, and, of course, Prime Video. Of note, Walmart is considering programs “that target consumers who live outside of large cities,” according to people familiar with the plans. However, for the entirety of America, there’s more to it than that.

The future of gaming hardware is … streaming?

E3 2018 was full of references to the rise of streamed gaming — Electronic Arts announced a push for it at its press conference, and Microsoft by announcing its own plans, including the rumored “Scarlett Cloud,” a streaming box designed for Microsoft’s new game-streaming platform that’s planning to deliver “console quality gaming on any device.” With these announcements coming to light along with the unexpected release of Resident Evil 7: Cloud Version – an exclusively streamed version of the popular shooter franchise – it has become abundantly clear which direction the industry is headed in.

This sudden, extensive push toward streaming games to devices instead of running them from hardware paints a new vision of the possible future of gaming. Ubisoft CEO Yves Guillemot even recently said that the next console generation would be the last, and that he thinks “streaming will become more accessible to many players and make it not necessary to have big hardware at home.”

It’s already been done (except it hasn’t)

Many have tried and failed to create a game streaming service, and it’s a challenging thing to get right. Sony acquired streaming games service OnLive, which didn’t last, and its previous acquisition of Gaikai eventually became part of PlayStation Now. Nvidia wants to stream games to PCs, but each and every one of these services suffers from latency roadblocks that hold them back from being widely used. That’s because streaming a game — especially one with 4K resolution, or HDR, or at 60 frames per second or higher — requires a ton of bandwidth, and American gamers often simply don’t have access to internet services that can handle it.

It’s now less about the hardware and more about the back-end technology that will be able to support live-streaming across the country. Even with high-speed connections and responsive networks delivering content, the future of gaming doesn’t exist without a true real-time experience; high-quality, sub-second latency delivery without a limit on the number of concurrent users. Otherwise, gamers won’t be on par with one another, thrashing the whole purpose of online multiplayer games based on streaming consoles.

As it stands, the U.S. is one of the most expensive places in the world to get internet. One in four U.S. homes are unable to get broadband at levels even close enough to effective streaming speed for consoles. Broadband-level speed, defined as 25Mbps or higher, is only achievable for one in five homes.

If those speeds and prices were to improve, then streaming games could become viable. But the Federal Communications Commission has spent the last year stripping affordability programs that make broadband accessible, and the $2 billion plan to connect rural America still hasn’t even begun. Since Walmart wants to compete with Amazon in video streaming, and Microsoft needs to catch up to Sony in gaming, they both see a clear opportunity to create a cross-device service for cloud streaming, but they know it needs to be faster and better than current offerings.

What type of technology comes next

None of the current services have addressed the latency issues that torment fast-paced online multiplayer games. If any of the announcements and revelations made at E3 this year are to carry any weight for what the future holds, Microsoft and Walmart’s new partnership must work together to produce a new era in the industry.

Better live streaming technology is set to be the main avenue for them to expand their reach, connect with new audiences, and ultimately increase their bottom lines. This means working on enabling streaming to millions of concurrent viewers while reducing operating bandwidth costs and avoiding traffic bottlenecks. In today’s streaming market, most services are built off of HLS technology using a CDN (content delivery network), designed to stream to large audiences but with significant latency, or WebRTC – which offers content publishers a real-time streaming solution, but does not have the capability to scale past a few hundred users. The right technology to support the future of streaming will be a “best of both worlds” solution that offers speed and scale.

Microsoft’s Phil Spencer mentioned he “looks at investing into three key areas: content, cloud, and community – that is, making great games, making the experience of accessing and playing them better and improving things for the players overall.” Right now, delays and poor picture quality plague live streaming providers. Compounding this, providers aren’t tapping the potential live streaming can offer: an interactive experience that allows global participants to connect with each other simultaneously.

To succeed, Microsoft and Walmart need to crack the code and turn the current state of “live streaming” into a true real-time experience. And who knows – maybe one day, through this strategic partnership, Walmart will follow suit and enter the gaming industry, too.

Dr. Stefan Birrer is an entrepreneur and software architect with extensive experience in designing and developing complex streaming applications, and is currently the co-founder and CEO of real-time streaming platform Phenix.