Cloud gaming won’t have the impact many expect, but every cloud has a silver lining

Melissa Zeloof
Oct 3, 2019 · 5 min read
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In 2019, Google and Microsoft revealed their ambitions to launch cloud gaming solutions, i.e. digital catalogues of AAA games, which can be played instantly on any device. Although the concept is far from new (others, like OnLive, have tried and failed), the biggest industry players are now flexing their muscles and the space is heating up. With the gaming industry set to reach $90 billion by 2020, can the cloud take it to new heights?

The Netflix of Gaming

First, we should examine the limitations that exist in the current gaming world, specifically consoles, to understand how cloud gaming can positively impact the industry. Let’s begin with cost: buying the latest Xbox One or Playstation 4 with a bundle of games will set you back anything between $200 to $500, and every few years a new model comes out. Aside from price, playing a game on a console requires a fixed location, games can take 40 minutes to download, and system updates are regularly required, all of which delay the gaming experience.

Cloud gaming has the potential to solve these issues. Instead of owning a console, a $10 monthly subscription will give gamers access to a digital catalogue of rich, high-definition and highly-immersive games. Users will be able to play on any device, without needing to own hardware. All that will be required for instant access is an internet connection, removing the delays that currently exist. With cheap mobile data plans globally and the emergence of 5G, AAA games will be accessible to a degree unprecedented in gaming history.

As venture investor and writer Matt Ball writes, like previous historical innovations in technology The result, it is hoped, will be a new wave of casual gamers playing more traditionally hardcore games, and perhaps even more people playing games overall than ever before.

Digging beneath the hype

But are access, friction and processing power really what stand in the way of more people playing more games? While cloud gaming may remove these barriers, it’s unlikely that that will impact how gamers from casual to hardcore will consume game content, because of the nature of the experience they are looking for.

On the one hand, hardcore gamers are unlikely to want to play on mobile devices while partially attentive or on-the-go. By any measure, AAA games on a mobile phone are less sophisticated and immersive than they are on a console connected to a TV. With that in mind, to this demographic cloud gaming’s biggest selling point seems irrelevant. For hardcore gamers, the need for a fixed location and the commitment to play with full attention are not barriers, they are crucial aspects of the gaming experience. Latency will be another hurdle for cloud platforms, one that could deter hardcore gamers from buying in: even the slightest delay could be the difference between life and death in a game.

On the other side of the spectrum, it seems equally unlikely that casual gamers will be interested in paying a monthly subscription for access to games. These players are used to accessing the games they love for free, and playing them in between or even simultaneously with other activities. They often don’t even identify as gamers, and are therefore unlikely to fork over money for a game subscription. While certain barriers like requiring hardware and a fixed location will be removed, the high skill and attention requirements for AAA games remain, and these are demonstrably not what hyper-casual or casual gamers are interested in.

Moreover, even if there were a huge, untapped market of casual cloud gamers, a further barrier still exists: cost. Google Stadia announced it will charge $9.99 a month in addition to full price purchases of certain titles. If casual gamers aren’t buying game titles today, being able to access them from anywhere is not going to move the needle for them in terms of conversion. In fact, in many ways, cloud streaming falls short of the solution to expensive consoles some make it out to be.


That being said, cloud gaming will still have some impact on the market. One demographic it could be particularly successful with is lapsed console gamers: those who used to play seriously but now only play occasionally. Since 2012, the number of console owners in the U.S. alone has not fallen lower than 85 million, peaking in 2014 at 102 million. The convenience of cloud gaming could draw lapsed gamers back into the ecosystem and act as a gateway to move them along the value ladder, for example paying for full priced games further down the line.

The spectacular rise of Fortnite could also be a positive indicator for cloud gaming. One of the reasons for Fortnite’s astonishing ascent — its cross-platform functionality — will be enabled by the cloud ecosystem. Fortnite: Battle Royale was initially available on desktop and consoles, but exploded when released on mobile (within five months of launching on iOS, 100 million people had downloaded the game). That’s not to say all games on the cloud will be as popular as Fortnite just because they’re cross-platform, but it could be a boon for the best games.

We may also see one of the cloud giants purchase exclusive rights to host Fortnite (or another hugely popular game) on its catalogue. This on its own could conceivably bring hundreds of millions of gamers instantly into the cloud ecosystem. Epic Games has worked closely with Amazon’s server platform, so they are potentially front-runners in the inevitable race to purchase the exclusive rights for Fortnite in the cloud.

New ways of playing

Lastly, cloud gaming could play a part in what some experts predict will be the next big thing in gaming: spectator-participants. As some have argued, in “unlocking the relationships which exist between spectators, developers and streamers,” cloud gaming could redefine how games are experienced and monetized.

With Twitch users watching 44 billion minutes of live video game streaming per month, and eSports attracting 380 million viewers for its competitive gaming competitions in 2018, there is room for a tool that enables mass-spectator interaction, such as voting to influence the gameplay. Twitch is ahead of the curve, having released the Twitch Plays category in 2016 that gives audiences control over “player” actions in certain games. Exactly how the cloud ecosystem could shape this concept remains to be seen, but it can provide the capabilities for the mass-participation of concurrent viewers, and accessibility on any device, from any place.

While it’s unlikely cloud gaming will replace consoles and PCs or convert a new audience of casual gamers to more traditionally AAA titles, every cloud has a silver lining. Like other new formats and vehicles for enjoying games have done in the past, we can expect cloud gaming to add another stratum to the market. By expanding the range of possible gaming experiences and creating more accessibility to traditional gaming titles, cloud solutions are likely to contribute significantly to the value of this rapidly growing market.

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