Why is Germany a Profitable Market for Cloud-Based Gaming?
Germany has 37.2 million gamers hooked on video games. This is the gaming capital of Europe and the region’s largest market, which generated around $4.4 in revenue in 2017. The German market is fourth in the world by volume, trailing such giants as China, the United States, and Japan.
Soon, e-sports could even be recognized as an official sport in Germany. This year, Playkey is taking part in the rapid development of the German market: the cloud-based gaming service will be made available for German residents. What kind of gamers does Germany have and what’s on the horizon for the industry?
More than 90% of Germans use the Internet. That’s 74 million people. More than half of these people play strategy or shooter games at least once a month, with 41% of these gamers being women. Console games sell best, and the shares of PC and mobile games differ by only 5% (28% and 23% of total market revenue respectively). Here’s what the best-selling video games in Germany were a year ago:
- FIFA 17
- Pokemon Sun/Moon
- Uncharted 4: A Thief’s End
- Battlefield 1
- Grand Theft Auto 5
- Farming Simulator 17
- Tom Clancy’s The Division
- Call of Duty: Infinite Warfare
- Far Cry: Primal
- Mafia III
All of these games have sold several hundred thousand times, while FIFA 17 has sold more than a million copies overall. According to a study by Newzoo, more than half of all gamers in Germany spend money on games, spending on average $192 per month. That’s more than in China despite the fact that the Chinese market is the largest in the world — Chinese gamers spend about $122 per month.
In Germany, games are not only played, but they’re also extensively produced. The country has several hundred active studios, which have released universally acclaimed games such as Black Mirror, Far Cry, Crysis, Lords of the Fallen, and Assassin’s Creed: Identity. The German trade fair Gamescom is the largest in the world by attendees — it had an attendance of 345,000 in 2017.
German Cloud-Based Gaming
A quarter of German gamers (almost 10 million people) do not prefer one gaming device over another — they switch between PC, consoles, and laptops. This is a big opportunity for cloud-based gaming, whose users can play any game on a PC with any performance rating or a laptop, as well as on any operating system (yes, even on a Mac).
Playkey has already placed some of its servers in Germany, and last year Darz invested $1.5 million in the company. The next logical step is to make cloud-based gaming closer for German residents, and this is what Playkey will do in 2018 simultaneously with the introduction of its new decentralized platform.
The main challenge for the cloud-based gaming service is providing high levels of quality when transmitting video streams and player commands. In Europe, Playkey is already working with G-Core Labs, a leading solution provider that provides infrastructure for game developers, video services, and other companies requiring high-quality IT infrastructures and data transfer speeds. The company built an infrastructure for Wargaming across the globe and supported Nordeus, one of the fastest-growing European game studios. G-Core Labs also supported Battlestate Games (known for Escape from Tarkov, among others), RedFox Games (Black Desert), and G5 Entertainment.
G-Core Labs will ensure that Playkey works seamlessly when entering the German market as well, even if every gamer rushes to play from the cloud at once. The provider already has experience supporting a network with more than one million online gamers at once. Unlike with other companies, this partner provides a wide range of services (CDN, security, hosting, video platform, cloud), so Playkey and gamers won’t be depending on several vendors. G-Core Labs is also ready to expand upon the services provided at the request of the client, so even after the implementation of a conceptually new product — a decentralized cloud-based gaming service — Playkey users can depend on professional support from the provider.
“We have been keeping an eye on this market for a long time, and the conditions for success are becoming more favorable.
FTTH and other broadband technologies are becoming more widespread. There are more GPU server manufacturers, with higher 1RU performance and prices dropping. All of this makes the business model viable.
We, in turn, as a solution provider for media companies, will provide greater opportunities for these projects to be realized. We provide a means for hardware to be installed all over the globe in the shortest time possible and as close to the end user as possible. We minimize the delay between the client’s infrastructure and consumers. This is one of the key criteria for gaming businesses,” says G-Core Labs founder Andre Reitenbach, assessing the outlook for cloud-based gaming in Germany.
After a successful launch in Germany, Playkey, with the help of G-Core Labs, will continue its expansion to South Korea, one of the fastest-growing world markets. By the way, you can take part in the development of cloud-based gaming in Europe yourself: we need a country manager in Berlin.
Is the German Gaming Market Ready for Blockchain and Cryptocurrency?
Blockchain is one of the technologies that, in all likelihood, will change the gaming industry. But since using blockchain technology often involves introducing a cryptocurrency and launching an ICO, the development of the market largely depends on the bodies regulating these spheres.
In Germany, cryptocurrency is nothing new: both in general (Bitcoin was recognized as personal money in Germany back in 2013) as well as for gamers (game developer Bigpoint first tested Bitcoin as an in-game currency in Germany and the US four years ago).
Not only has Germany decided to develop a regulatory framework for digital currencies, but it’s also one of the main lobbyists for this matter in the European Union. In February 2018, the ministers of finance of France and Germany, and heads of Deutsche Bundesbank and Bank of France called for adding the topic of cryptocurrency regulation to the next G20 summit agenda. They point out that cryptocurrency can carry risks for investors and lead to financial crimes, but they don’t want to ban digital money — instead, the issue is creating a legal framework that does not yet exist in Europe.
Germany is wary of ICO launches for the same reason. In 2017, the Federal Financial Supervisory Authority (BaFin), the country’s principal financial regulator, warned of the risks associated with purchasing tokens. This happened a month after the first ICO, which was launched by Wysker, a Berlin e-commerce startup.
However, warning the investors who are participating in an ICO has already become a matter of decency for government organizations globally, so this should hardly be viewed as an obstacle. Real headway in regulating cryptocurrency will likely begin this year, and it’s most important to focus on the actual changes in legislation. Until then, we still have time to launch our service in new countries and fine-tune how it works before having to face the task of conforming to a new legal framework.
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