Next Big Bet
It looks like the dream of cloud gaming is finally poised to become a reality. After 20 years of technological advancements, major company’s are throwing their hats into the ring to be the go-to spot for game streaming service. Xbox announced its new cloud gaming service in July, built on the XCloud technology that powered Mixer. Google launched its cloud gaming service Stadia this summer, even signing some games like Orcs Must Die! 3 to be exclusive to the new game live streaming platform. Amazon announced details on their upcoming cloud gaming service Luna last week. Even Ubisoft and EA have announced their own cloud gaming plays. All the biggest players in tech appear to be in an arms race to build the superior cloud gaming service. So, what exactly is cloud gaming, how does it work, and why does every major publisher appear to want a piece of it?
Cloud gaming is a method of playing video games using remote servers in data centers. There’s no need to download and install games on a PC or console. Instead, streaming services require a reliable internet connection to send gaming information to an app or browser installed on the recipient device. The game is rendered and played on the remote server, but you see and interact with everything locally on your device. It’s just like Netflix or any other streaming platform. The only difference is that the server where the video stream is coming from can also pick up and react to your inputs. That means you don’t need a beefy RTX 30-series graphics card or a new Xbox Series X or PlayStation 5. With cloud gaming, all you need is a reliable internet connection. Cloud gaming — in most cases — requires a subscription paid on a monthly or yearly basis in order to access the content. With certain services, games must be purchased on top of that fee.
The pandemic has adversely affected almost every industry. Gaming, on the contrary, has witnessed growth during the pandemic. We saw user engagement growing considerably during this period. Multiplayer games, Real Money games have reported more user engagement and higher traffic during this period. The industry observed around 35% higher usage in multi-player modes in comparison with single-user modes. Gaming was previously more popular among kids and adults up to the age of 30. During the pandemic, we saw the adoption of gaming across all age group up to the age of 45. We also saw a considerable increase in female gamers during this period.
The cloud gaming market will see a significant 59% rise between 2021 and 2022, according to Global Data, reaching a valuation of $3 billion. However, the leading data and analytics company’s latest report ‘Tech, Media, & Telecom (TMT) Predictions 2022 – Thematic Research’, highlights that this potentially disruptive sector will remain niche in 2022 unless companies can provide exclusive games and reasonable pricing. In 2022, cloud gaming services will try to boost their popularity by offering exclusive and trending gaming titles. Not only will cloud gaming tech giants become publishers within their own right, but independent games publishers will become attractive targets for acquisition as they look to add exclusive titles to their portfolios. This will trigger a wave of consolidation in the market. The most popular platform for cloud gaming will be the smartphone, with Android set to benefit most from this. Samsung Electronics, BBK Electronics, Xiaomi, and Huawei will be positioned well if they partner with cloud gaming providers to successfully position their 5G smartphones in the mobile gaming space.
Newer services like Stadia and Xbox’s cloud gaming are all backed with advanced streaming technology which promises lower input latency rates and the ability to finally access your games from phones and tablets. The various companies creating cloud gaming platforms are making some big promises, so we will have to wait and see if they live up to the hype. If everything works out as planned, cloud gaming services could revolutionize how and where we play games.