Over recent years, developments in advanced cloud technology have turned the idea of cloud gaming from a potentially significant new model within the industry into a reality. Indeed, a new report from Juniper Research found that the video games industry will exceed $200 billion in value in 2023; growing from an expected $155 billion in 2020. And it will be mobile and cloud gaming to lead this growth, as the market shifts further towards recurring revenue, and purchase revenue declines by 5% over that period.
The emergence of cloud gaming is very much in keeping with the wider media trend of consumption being centred around the mobile phone and tablets, and the desire to access content whenever and wherever needed: a shift of emphasis from ownership to variety and accessibility. Utilising cloud technology in the video games industry allows users to bypass download/installation times, an appealing factor, as games file size continues to increase.
Large technology players are getting increasingly involved in the cloud gaming trend. Recently, Microsoft announced that EA Play will be accessible through Gamepass, whilst others such as Google, Sony and Nvidia have launched cloud gaming services. With other players such as Verizon, Walmart and Amazon looking to enter this space with similar services, cloud gaming is beginning to enter the scene and, with it, subscription models within the video games industry.
The subscription model provides games publishers with the opportunity to ‘lock-in’ users to their platform; guaranteeing not only income, but also the hope that a user will be keen to keep the service and not venture elsewhere once they begin paying a subscription. Gamers may have their favourite titles, but they also want variety, which they can get from the gaming platforms that offer hundreds of games.
Along with subscription models, the popularity of the GaaS (Games-as-a-Service) model and of mobile games, facilitated by the increasing 5G roll out across major economies, is also having an impact on the video games industry; helping the shift toward cloud gaming.
There are however some market constraints to be taken into account, namely, internet provision (as cloud gaming relies not only on speed, but also on data), the growing popularity of the free-to-play model, and the issue of game ownership, be it physical or as a download.
We therefore believe that, despite a strong start, cloud gaming is still facing important challenges, such as Internet speeds, data cap restrictions and the popularity of F2P games.
Our latest whitepaper, Will Cloud Gaming Change the Way We Play?, highlights the role that cloud gaming will play in the video games industry, as well as discussing challenges and implementation strategies.
Download the Whitepaper: Will Cloud Gaming Change the Way We Play
Related Research: Video Games