Cloud gaming to fundamentally disrupt the distribution, consumption and monetization of games

Even though cloud gaming only represented 1% of video games industry revenue in 2020, the technology is expected to fundamentally change the space over the next ten years growing at a compound annual growth rate of 40% to 2030. In a recent GlobalData webinar, ‘Cloud Gaming: Fundamental Changing the Video Games Industry’, Associate Project Manager Rupantar Guha noted that cloud gaming has the potential to disrupt the industry, having a huge impact into how games are distributed, consumed and monetized.

Guha comments: “In ten years, traditional PC and console games will have been replaced by games hosted in the cloud and accessed via thin-client PCs, consoles, or mobiles. This may be an even smoother transition if the challenges around 5G rollout are addressed, as this is one of the technology’s major barriers. For now, the industry is awaiting the widespread rollout of 5G, which will offer the internet speed, network latency, and server availability required for a high-quality experience.”

Below, GlobalData outlines these three key impacts of cloud gaming’s transformation from newcomer to disruptor:

Distribution

With cloud gaming, games are directly delivered to users without the need to download files to devices or purchase physical media.

Guha notes: “The direct distribution of games could threaten the future of distribution channels such as Steam that sell downloadable PC games and companies that manufacture and sell console games.”

Consumption

Cloud gaming is a potential threat to manufacturers of high-end gaming PCs and consoles.

Guha comments: “Cloud gaming offers seamless portability. Users will no longer need to buy expensive consoles or PC components to play high-end games. Instead, users can transition from one device to another, indoor or outdoor, without hampering their game sessions or high-quality gaming experience. Cloud gaming provides players freedom with its mobility factor, meaning gaming can truly be a mobile experience.”

Monetization

Cloud gaming enables users to access games by paying monthly subscription charges, which reduces the need for large, one-off game purchases. This will impact the revenues of game distribution platforms and mobile app stores.

Guha adds: “Monetization is a critical aspect of cloud gaming, although it is still at an experimental stage. The industry is working to discover the best way to add customers and generate revenues. Most cloud gaming services are subscription-based and exclusive content is increasingly becoming critical to attract customers. Those that lack such capabilities must change their business models in order to remain competitive.”

You can find out more about trends playing out in the cloud gaming theme by watching the webinar recording. The webinar recording will help you learn about the leaders and winners in the theme, the importance of 5G to cloud gaming, and what risks cloud gaming services will encounter from regulators. The content was based on GlobalData’s report, ‘Cloud Gaming – Thematic Research’.