Moving into a new console generation is always exciting when considering the new games we'll be able to play, paired with better hardware for the best possible gaming experience. One concern is always whether or not we'll be able to take the games we love from our current generation and play them with better graphics and frame rates on our shiny new boxes.
Though Microsoft has been touting backward compatibility as a key feature for the Xbox Series X and the Xbox Series S, it seems that it's not as simple as they've made it out to be. Specifically with the Xbox Series S, the new budget next-gen console will not run Xbox One X enhanced versions of backwards compatible games, but rather the Xbox One S versions of Xbox and Xbox 360 games. I know, I'm already confused myself.
What this means essentially is that all new Xbox consoles are backwards compatible, but some Xbox consoles are more backwards compatible than others. That is to say, the Series S will not in fact be the best place to play your entire legacy collection of Xbox games available on the Microsoft Store. It'll actually be worse than the current generation's Xbox One X. The Series S will still provide some improvements on the Xbox One S versions of the games, such as faster load times, improved texture filtering, Auto HDR and more consistently/higher frame rates.
The official word from a Microsoft spokesperson is as follows: "Xbox Series S was designed to be the most affordable next generation console and play next generation games at 1440P at 60fps. To deliver the highest quality backwards compatible experience consistent with the developer’s original intent, the Xbox Series S runs the Xbox One S version of backward compatible games while applying improved texture filtering, higher and more consistent frame rates, faster load times and Auto HDR"
So to summarize: The Xbox Series S will play the non-upscaled and non-improved Xbox One S versions of backwards compatible games, with some improvements that come from the improved hardware. It will NOT be able to play your old games in 4K with the improved textures and higher frame rates given to games that have been Xbox One X enhanced. This is still the case even though the Series S does support 4K upscaling.
All of this derives from the fact that the Xbox Series S was never designed to be a 4K device, and is targeting 1440p resolution instead. Part of this aim was being able to get the price as low as it is, however it is starting to become clear that the Xbox Series S could potentially be a lot more handicapped than we've been led to believe. All this speculation though will come to an end when we have the console in our hands and can test it for ourselves. In the meantime, it seems like everything regarding the transition into the new console generation for Xbox is clear as mud.