Microsoft is preparing to launch an ad-supported version of Xbox Cloud Gaming, according to sources cited by The Verge. The company has begun internal testing, allowing employees to stream select games for free without a Game Pass subscription.

The free, ad-supported version will let players stream some games they own, eligible Free Play Days titles, and Xbox Retro Classics. During testing, users encounter around two minutes of preroll ads before gameplay, with session limits set at one hour and a maximum of five hours per month—though these restrictions may change at launch.

The service will be available on PC, Xbox consoles, handheld devices, and via the web, with Microsoft planning a public beta before the full rollout in the coming months.

The announcement comes as Xbox Cloud Gaming officially exits beta and Game Pass Ultimate subscriptions now support streaming in 1440p resolution with up to 30Mbps bitrates, while Premium and Essential subscribers are limited to 1080p and 12Mbps.

This move coincides with a recent overhaul of Game Pass, which included a 50% price hike for Ultimate subscribers, added day-one releases, and the inclusion of Fortnite Crew and Ubisoft+ Classics. Microsoft also removed the 10% DLC discount for Ultimate members, replacing it with a new Rewards program.