Cloud Gaming: The Challenges and Opportunities

Are we facing a future where discs, downloads and consoles are rendered obsolete? As companies around the world test out tech that could change the way games are played, distributed and sold, it seems cloud gaming – something that was once viewed as pie in the sky – is finally becoming a reality. Here’s all you need to know…

Cloud gaming – then and now

In 2019, anticipation around cloud gaming reached fever pitch: Microsoft previewed Project xCloud at June’s E3 convention, while Google launched its cloud gaming service – Stadia – in November after its Founder’s Edition sold out in a matter of weeks. 

Both promise a cross-platform gaming experience – xCloud is attached to Xbox One controllers and games like Gears 4, Forza Horizon 4 and Halo 5 can be played on Android phones. Stadia can be accessed via TVs, desktop PCs, laptops, tablets and Pixel smartphones without the need for a game launcher. 

And while xCloud is currently in a public beta, which features more than 50 titles, Microsoft is promising big things, having recently announced that the service will have the capacity to play all 3,500 games in the Xbox catalogue, with an additional 1,900 games still in development. In response, Google has added sporting titles like Football Manager 2020 and NBA 2K2020 to its current streaming offer of 20+ games, which includes Red Dead Redemption 2 and Assassin’s Creed Odyssey. 

With Sony’s PlayStation Now, Nvidia’s GeForce Now and a host of start-ups also entering the cloud gaming race for supremacy, consumers will be exposed to a range of services. But are they – and their internet infrastructure – ready? According to research carried out in 2019, 55% of US gamers were ‘not at all familiar’ or ‘hardly familiar’ with cloud gaming (source: Statista), meaning there’s a huge opportunity for education around the benefits of streaming video games. 

As for questions of connectivity, there’s a reason Microsoft and Google are leading the way. Microsoft’s Azure servers (operating in 140 countries) promise end-to-end quality therefore lending credibility to its cloud gaming service, while Google manages content distribution through its powerful cloud campuses and thousands of edge nodes located around the world. But there’s more to launching a successful cloud gaming offering than simply having the data centres. 

For more on the future of cloud gaming, download our latest report ‘Gaming Marketing 2020: Trends to Stay Ahead of the Game’. 

The cost of cloud

Access to a high-end gaming experience without the need for additional hardware and the ability to play across a range of screens with no waiting around for downloads or updates – cloud gaming certainly boasts a lot of benefits. But at what cost? 

In these early stages, we are seeing cloud gaming companies experiment with full-price game purchases and subscriptions. And, when you look at the way we consume other forms of entertainment (TV, films and music), cloud streaming and subscription models do make sense – just think of Netflix and Spotify.

But what should a subscription look like? Is it a regular ‘all you can eat’ price or a monthly flat fee which includes some games with the option to pay for more? For example, Stadia only included Destiny 2: The Collection for free when it launched – everything else incurs an extra charge, but that’s all set to change later this year with the launch of new packages. 

And this is where things might get confusing. Take Ubisoft and its PC subscription service UPlay+. A monthly flat fee grants access to more than 100 games, but what happens when these games are made available on Stadia? And when Ubisoft’s highly anticipated Watch Dogs: Legion does hit Stadia, it will also be made available on PC, Xbox One X and Playstation 4. This lack of exclusivity could very well indicate that publishers are still waiting for more reassurance that cloud gaming will come good on its promises. 

Publishers are playing their own game

Just as gamers need a PS4 to play Sony titles and Microsoft’s proprietary games have often been restricted to Xbox and PC, some games will only be available on some streaming services. So as content owners and publishers pick where to place their games, people may find they need to subscribe to multiple services to play every game possible.

As with the Ubisoft example, Marvel’s Avengers from Square Enix will arrive on four systems when it’s released in May, while EA Sports has already been playing the field for some time with its PC subscription (Origin Access, which has more than 200 games) and Xbox and PlayStation subscriptions (EA Access). In addition, it is currently developing its own game-streaming service (Project Atlas) and partnering with a start-up studio to build its subscription catalogue.

Related Read: Virtual Reality in Gaming: What Marketers Need to Know

Getting up to speed

When you consider that Japan is home to the world’s fastest internet (nearly triple the global average) it comes as no surprise that cloud versions of Odyssey and Resident Evil 7 for Nintendo’s Switch were trialled there. By 2022, the cloud gaming segment of the overall global gaming industry could represent between 25% and 50% of 5G data traffic (source: Openwave Mobility). So, as mobile operators deploy 5G networks, it’s vital that they prepare for the disruptive impact cloud gaming could pose. Verizon’s Netflix-style cloud gaming service is up and running on the Nvidia Shield set-top box and will soon be rolled out to Android smartphones, giving the US telco an opportunity to demonstrate its 5G capabilities in the home and out and about. 

Access games – and audiences – from anywhere

Streaming means streamlined and cloud promises to provide the ultimate cross-platform gaming experience – players kick things off on their TV at home and keep up with the action while travelling to work on a mobile or tablet. One game that’s intent on breaking down the barriers between platforms is Fortnite, which allows players to carry their progress and purchases across platforms and compete against (or with) players on different devices.

As online gaming grows, there’s no reason why in-game advertising couldn’t work in a similar way to other forms of online advertising. Taking this reasoning – and running with it – is London-based tech company Bidstack. Enabling brands to buy in-game advertising programmatically, the platform takes real world out-of-home (OOH) ads and places them in video games. For example, they might appear to players on virtual stadium hoardings. 

Providing publishers with a revenue stream, in-game advertising also keeps players happy by not interrupting the gaming experience. In fact, you could argue that it actually increases the reality of the gaming experience. Following a partnership with leading esports team NFG and campaigns for brands including Domino’s Pizza, the charitable organisation Movember and even the NHS, Bidstack’s growth shows no signs of slowing down and was recently rolled out in the US.

Related Read: Gaming Marketing: The Social Media Game Plan

What will happen to hardware? 

While some commentators thought mobile gaming might signal the death knell for consoles, the segment continues to grow. And cloud gaming doesn’t appear to be posing a serious threat just yet, either. As it becomes increasingly possible to directly stream big blockbuster games from the internet to any device, one of the clear benefits of cloud gaming is that people don’t have to pay for a new box to get updated hardware. But that hasn’t deterred Microsoft and Sony from announcing successors to the Xbox One and PS4, which are set to launch this year. 

With Google and Microsoft well on their way to claiming a significant share of the cloud gaming market, and Amazon seemingly hot on their heels, it seems other large tech players will follow suit. For more insights on cloud gaming, download our gaming marketing report here.


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