The Next Level in the Streaming Wars: Cloud Gaming
Over the past four decades, the gaming industry has seen many technological innovations and cultural changes. While gaming was historically viewed as an activity reserved for gamers alone, cloud gaming has expanded access to the general public, giving rise to the billion-dollar esports industry and to blockbuster games like Fortnite and League of Legends.
According to industry experts, cloud gaming will generate around $590 million in revenue by the end of 2020 and will grow to upwards of $5 billion by 2023. Given the potential upside of early dominance in the industry, tech giants are racing to stay ahead of the market and are attempting to hinder their competition at every occasion. As a result, the cloud gaming market is constantly evolving, with major tech players like Microsoft and Google announcing their recent proprietary cloud gaming platforms. Google’s Stadia has been targeting gamers with high data allowances and delivering the gaming experience on high-resolution displays, while Microsoft’s recently launched xCloud is catering to limited pools of Android owners and Microsoft Xbox users.
As opposed to the offline gaming experience, cloud gaming is neither dependent nor limited to users’ devices; without the burden of download times and specialized consoles, cloud gaming allows upwards of 2.5 billion gamers worldwide to play any game from almost any device. Much like Netflix’s impact on the media streaming industry, cloud gaming extends the ease of use and flexibility, thereby disrupting the gaming industry and creating an attractive market for consumers and game developers alike.
Another fascinating aspect of cloud gaming is the limitless gaming experience. Previously, gaming was limited by asynchronous design and software updates; to receive the latest version of a game, consumers had to download the latest updates, consisting of new potential features and bug fixes. By eliminating the need for users to perform downloads and updates on their local devices, playing games has become more efficient and accessible, which serves to drive the growth of the cloud gaming market even further.
Although cloud gaming platforms have the potential to radically change the way games are played, the services they deliver are much more complex than those of media streaming services, and the different classes of users targeted are quite different than your average Netflix subscriber. For example, while many consumers fall under the category of Netflix binge-watcher, gamers can be classified into a broader spectrum of categories, from casual non-gamers to hardcore Twitch players. As opposed to dedicated gamers, non-gamers are likely to be discouraged by the idea of having to set up games on their devices and dealing with any ensuing software or hardware upgrades.
To reach even more gamers, gaming companies are betting on mobile gaming as the next medium of choice for delivering a high-quality gaming experience. Technological advancements have vastly improved mobile gaming over the past couple of years alone, making it possible – and cheaper – for casual gamers to play groundbreaking games on their smartphones. With an estimated 3.5 billion smartphone users worldwide, the opportunity behind mobile cloud gaming is immense, and the cloud gaming market for smartphones is expected to grow considerably in the upcoming years.
Although cloud gaming platforms seem to be a promising avenue for the gaming industry to reach larger audiences and to provide an enhanced gaming experience, the industry isn’t immune to setbacks. For starters, network infrastructure significantly constrains cloud gaming, as a streamed game can only perform as well as its network. In fact, many gaming companies are limited to using servers in existing data centres or renting space from a large cloud, which hinders their ability to host fully-featured cloud-gaming platforms.
Moreover, cloud gaming platforms raise some important concerns within the gaming ecosystem, the first being a potential devaluation of individual games. Much like the effect of Spotify on independent artists, gamers worldwide are expected to attribute less value to individual games as they gain access to a plethora of games over cloud gaming platforms. This concern is compounded by the likelihood that top gaming companies with vast resources and game libraries will monopolize the industry and inhibit smaller companies from competing. Such behaviour can be seen with Apple and Google’s recent lock-out strategy, whereby 30% cuts – compared to industry highs of 20% – are levied on transactions for digital goods and services within apps developed by external companies. However, such actions taken by industry leaders are not without retribution by the gaming industry. After Epic Games attempted to bypass Google and Apple’s billing systems, Google and Apple removed Fortnite from their marketplaces, instigating consumer boycotts and multiple lawsuits.
The competitive actions taken by gaming marketplace providers and developers alike certainly call what the future competitive landscape of the industry might look like into question, but consumers can be sure that cloud gaming is here to stay. To meet consumer expectations, however, cloud gaming platforms still depend on future technological advancements and the propagation of widespread 5G networking. However, given the advent of 5G networks, it is seemingly inevitable that these platforms will have the capacity to deliver high-quality cloud gaming products. For all we know, the days of going to a brick-and-mortar store to buy your favorite new game are far behind us.