A report from GlobalData highlights the big changes that cloud gaming will bring to the industry which requires consideration.
Cloud gaming is still a small industry – representing around one percent of gaming revenue in 2020 – but it is expected to grow quickly as technologies like 5G continue to rollout and/or improve.
Rupantar Guha, Associate Project Director at GlobalData, said:
“In ten years, traditional PC and console games will have been replaced by games hosted in the cloud and accessed via thin-client PCs, consoles, or mobiles.
This may be an even smoother transition if the challenges around 5G rollout are addressed, as this is one of the technology’s major barriers.
For now, the industry is awaiting the widespread rollout of 5G, which will offer the internet speed, network latency, and server availability required for a high-quality experience.”
The cloud gaming industry is forecasted to grow at a compound annual growth rate of 40 percent to 2030 which shows why it would be ill-advised not to consider the impact it will have on how games are distributed, monetised, and ultimately consumed in the years to come.
Guha expects the direct-delivery of cloud gaming services will have a significant impact on not just long-suffering “brick and mortar” physical stores, but also digital distribution stores like Steam.
Similarly, manufacturers of high-end gaming components may also be at risk as consumers stream content rather than invest and upgrade their personal rigs.
“Cloud gaming offers seamless portability. Users will no longer need to buy expensive consoles or PC components to play high-end games.
Instead, users can transition from one device to another, indoor or outdoor, without hampering their game sessions or high-quality gaming experience.
Cloud gaming provides players freedom with its mobility factor, meaning gaming can truly be a mobile experience.”
This transition is likely the reason why Microsoft, as a hardware manufacturer and digital store owner, is investing in cloud gaming through its Project xCloud. NVIDIA, as a high-end gaming component manufacturer, is also doing the same through GeForce Now.
How games are monetised is also set for major disruption with gamers switching to enjoying more games as part of their cloud gaming subscription fee rather than one-off purchases.
“Monetisation is a critical aspect of cloud gaming, although it is still at an experimental stage. The industry is working to discover the best way to add customers and generate revenues.
Most cloud gaming services are subscription-based and exclusive content is increasingly becoming critical to attract customers.
Those that lack such capabilities must change their business models in order to remain competitive.”
Xbox Game Pass is often hailed as being one of the most successful examples of a game subscription service. The revenue it generates helps to fund games that may otherwise never be made – or struggle to gain the exposure they deserve – while for gamers it means they can try more titles without racking up large bills on their cards (or those of their parents.)
GlobalData’s full report, Cloud Gaming – Thematic Research, can be found here [paywall].
(Photo by Lorenzo Herrera on Unsplash)
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