TOKYO -- Microsoft is preparing to launch a cloud-based gaming service for Japan and Australia on Friday in a move that will likely stoke competition in the growing market.

The U.S. tech giant revealed its launch plans on Thursday during a livestream event for the Tokyo Game Show, one of the world's biggest gaming expos that opened earlier on the day.

Gamers in Japan and Australia will have access to the new cloud gaming service starting Oct. 1.

Anyone with a membership to the Xbox Game Pass Ultimate subscription service and its huge catalog will be able to play games streamed from the cloud on their Xbox consoles, PCs and even mobile devices.

The Netflix-like service, which is already available in the U.S. and Europe, has the potential to attract serious gamers and also casual users who do not own expensive consoles.

The rollout of 5G, or fifth-generation, networks is expected to be a major growth driver for cloud gaming, as the superfast connectivity will offer shorter loading times and low latency. This will make it possible to play high-quality games not only on dedicated consoles but also PCs and smartphones.

Microsoft has also made sure to add on-screen touch controls to their cloud-enabled games, eliminating the need for external controllers and making it easier for console-quality games to be played on mobile devices.

Microsoft estimates that there are three billion gamers worldwide. "[But] not all own gaming hardware," says Catherine Gluckstein, head of Xbox's cloud gaming service. "We want to democratize access to Xbox games and make them playable on devices they already own."

Subscribers to Xbox Game Pass Ultimate will be able to stream games from the cloud on Xbox consoles, PCs and mobile devices. (Photo courtesy of Microsoft)

Kareem Choudhry, corporate vice president of cloud gaming at Microsoft, explained that "Players are at the center of our strategy. ...We know that in Japan over 80% of console players also play on PC and mobile. This is proof that a broad ecosystem vision centered on players is right for the future of gaming."

Microsoft's push into cloud gaming comes amid a spike in pandemic-driven demand for home entertainment.

The cloud gaming market is expected to grow rapidly as other tech giants and established developers invest heavily in the business. Dutch research firm Newzoo predicts the global market for cloud gaming will more than double from last year and near $1.6 billion in 2021. By 2024 the market is expected to reach $6.5 billion.

Choudhry stresses that the company is "not trying to replace consoles," but rather is aiming to offer consumers more choices.

Microsoft released its newest gaming consoles -- the Xbox Series X and Series S -- in November 2020. Rival Sony Group also came out with its next-generation PlayStation 5 console the same month.

Sony has confirmed that PS5 sales reached 10 million units as of mid-July while U.K.-based analytics company Ampere Analysis said in an August report that Microsoft sold over 5 million units as of the end of June.

Super Mario developer Nintendo has shaken up the console war with its Switch device, which became the hottest gaming console in 2020, driven in part by its hit game, Animal Crossing: New Horizons.

Microsoft's shift away from a console-centered business comes at a good time, especially as the global memory chip shortage disrupts supply chains around the world. The growing energy crunch in China has caused further problems, as it has forced semiconductor-related companies to halt or delay production.

Sony, Microsoft and Nintendo have all been affected by the chip crisis.

Meanwhile, competition is heating up as game developers and tech giants rush to gain an edge in the cloud.

Sony launched its subscription-based PlayStation Now in 2014, ahead of many game makers who had considered similar services. PlayStation Now allows users to stream games to their consoles or PCs and has around 3 million subscribers. The number of users has gradually grown but still pales in comparison to the PlayStation Plus service, which pulls in monthly subscription revenue for its online multiplayer games and has over 46 million members.

Other similar platforms include Google's Stadia and Amazon's Luna, while Facebook and Netflix have also turned to cloud gaming. Chinese tech giants Tencent and NetEase are also ramping up efforts in cloud gaming.

While establishing a solid platform for cloud gaming is important, the ability to offer gamers exciting new content will still be crucial to success.

Sony has been on an acquisition binge, gobbling up gaming studios in a bid to build a strong portfolio of intellectual property. In 2019 the Japanese conglomerate bought Insomniac Games for $229 million. The California-based studio is known for developing the action game Marvel's Spider-Man.

Nintendo's surge in console sales, helped by its release of Animal Crossing, also serves as proof that content remains king in the gaming industry.