Cloud Gaming’s Hazy Fog ☁️
The promise of cloud gaming makes complete sense, and almost everyone agrees that the future of gaming will likely (eventually) be delivered via the cloud. Cloud gaming’s value proposition to the consumer is a no-brainer: play on any device, anywhere you are. Even further, Microsoft’s vision of cloud gaming only charges consumers one time for any game regardless of the device platform (if game companies choose “Smart Delivery”). For the cloud platform providers, clearly becoming the platform that controls the consumer’s access to content is a powerful position: this position would hold the most power in the gaming ecosystem if they are able to pull this off.
However, consumers do not seem to be jumping on board, and the supply side of the equation is similarly struggling. More games are being pulled from Nvidia’s GeForce Now, and Google’s Stadia service continues to struggle attracting more titles. Microsoft seems to be taking a more cautious approach, positioning xCloud as a supplement to consoles (at least initially) and tampering expectations by messaging that xCloud will be a multi-year journey.
So what’s wrong?
The problems with cloud gaming really revolve around 2 key issues:
- Business model to content providers
- Cloud platform delivery and costs
1. Business model to content providers
As Roger McNamee of Elevation Partners once said, “Between the content and the audience, everything in between is a choice.” New distribution platforms generally rely on exclusive content to drive adoption. Technology companies like Google often don’t understand content-driven businesses very well and miss on the content side of the business, instead focusing on the technology itself.
So far, what we’ve seen from Stadia hasn’t been very promising. On the content side, a very weak line up and “too little, too late” efforts building internal content capabilities to try and shore up that weakness. Moreover, services like Nvidia’s GeForce haven’t yet figured out a business model to properly compensate content providers. Is it a surprise that content providers don’t want to just give their content to Nvidia’s platform for free?
2. Cloud platform delivery and costs
Aside from technical limitations for real-time, latency-sensitive games, server side and network costs have been a major stumbling block for cloud gaming. In a Reddit AMA, Stadia revealed that they use 5–20GB of network data per hour of playing. For folks on Comcast that hit their 1TB data tier limit, that would translate to a cost of $10 per additional 50GB. Hence, even if Google figures out how to reduce server side costs (which should also be significant), it’s not clear whether consumer-side bandwidth costs would be solvable as well.
Further Reading
- Nvidia’s GeForce Now is becoming an important test for the future of cloud gaming
- Related: Nvidia’s GeForce Now loses 2K games, gains Epic support
- ‘Cyberpunk 2077’ and How We All Got Conned into Endlessly Rebuying Games
- Google’s ambitious push into gaming is floundering, and it’s due largely to too few games on its Stadia platform — here’s why developers have held back
Sign Up for the GameMakers Letter!
If you found this content useful, sign up for the GameMakers newsletter. Get critical business and game development insights weekly, sign up here:
