The cloud gaming market seems poised for substantial growth, although it will be difficult for new players to enter the scene.
In her newsletter published on Tuesday, consumer tech guru Elizabeth Parks claimed that the cloud gaming market is at an inflection point as industry heavyweights continue to increase their involvement in it and gaming is gaining popularity in consumer households.
In 2021, 75% of U.S. broadband households report playing video games for at least an hour a week, and 30% of those households admit to subscribing to or trying a trial of a free game service or paying, according to Parks, who is the president and CMO of Parks Associates, in Addison, Texas.
“Cloud gaming services provide a new opportunity to serve the gaming market and capture the consumer segment without gaming consoles or PC gaming hardware,” she wrote.
“Continued advancements in technology, growing expectations for entertainment consumption to be cross-platform, and the prospect of cloud gaming being included in ecosystem strategies make this an interesting market to watch going forward,” a- she added.
Few new entrants
However, Parks predicted that there will be few new market entrants. Setting up and operating a cloud gaming service is extremely expensive and difficult, she noted.
The most important requirement is a performance-competitive cloud infrastructure, she continued. It is expected that if there are new entrants, given the state of current competitors, it would have to be a party that wants to use the cloud resources of one of the competitors current ones, or which already has its own substantial cloud computing infrastructure.
One new place a new player can get the infrastructure they need is at Google, noted Ross Rubin, principal analyst at Reticle Research, a consumer technology consultancy in New York. “Google’s decision to focus on white-label offerings indicates that it believes there are better prospects for partnership than going it alone as a first-party service,” he told TechNewsWorld.
He added that although the window for new arrivals is not closed, it may be shrinking. “It’s always a market of enthusiasts,” he said. “There are more opportunities on the lower-cost, advertising-driven side of the market, as opposed to the relatively expensive subscription side.”
Fighting established brands
Mark N. Vena, president and principal analyst at SmartTechResearch in San Jose, Calif., agreed that conditions are getting onerous for newcomers to the market.
“It’s difficult for companies that don’t have a track record in gaming to be seen as credible, as many established players have strong brand reputations around gaming, especially from a titles perspective. legacy gaming,” he told TechNewsWorld.
“Microsoft and Sony really cornered the market a few years ago by gobbling up some of the most high-profile game studios with franchise titles under their belts, blocking out potential new entrants,” he said.
“Netflix, for example, is clearly trying to break into the cloud gaming space and is having difficulty because they don’t have any well-known titles in their gaming arsenal and more importantly they aren’t not perceived by consumers as a gambling destination,” he added.
Established players can also afford to trade losses for market share. “Microsoft has focused on using its cloud service as a lost leader. Most companies can’t afford to do that,” said David Cole, analyst at DFC Intelligence, a research firm. market in San Diego, at TechNewsWorld.
Entering the gaming market is usually a difficult proposition to start with, and doing so through the cloud presents additional hurdles, said Michael Inouye, principal analyst at ABI Research, a global technology watch firm.
“A new cloud gaming service will have a competitive disadvantage in most cases when it comes to game libraries,” he told TechNewsWorld. “Publishers just aren’t willing to put their games on every cloud gaming service.”
“In some cases,” he continued, “publishers may push their own platforms, have pre-existing agreements with other cloud gaming services, or simply disagree with the business model. “.
Cross-platform request
Nonetheless, Inouye argued that the market is large and there are opportunities for new players, especially in mobile games.
“Mobile-based cloud gaming, at least for premium services, can be difficult due to competition with free play in many cases,” he said, “but success can be achieved in the Asia-Pacific region because gamers there have shown a willingness to pay for mobile game-based content, although revenue per gamer is lower.
Parks also predicted that consumers’ desire for aggregation in the video streaming market will extend to cloud gaming. Subscribers to cloud gaming services can respond to marketing campaigns focused on the simplicity of a single point of subscription, purchase, billing and consumption – one point that allows them to play on all platforms, a she writes.
In addition to increasing the services’ appeal to consumers, she added, this aggregation approach potentially generates greater revenue for game developers by increasing their reach and allowing consumers to subscribe. to their content services.
“More and more consumers are demanding cross-platform gaming experiences so they can experience and participate in the game regardless of the device they use – console, smartphone, tablets, PC or even a Chrome laptop,” Vena explained. .
“Gaming has now become a cross-platform phenomenon and gamers don’t want to be locked into playing on a single device or operating system platform,” he continued. “It’s a consequence of the multi-device world we live in now, which will only grow in importance as 5G connectivity becomes more ubiquitous.”
Thrifty Players
Inouye agreed that there is a growing demand for cross-platform titles, and gamers especially appreciate it when games are cross-platform purchases – meaning if you buy a game for the console, you also get access to the PC version. – but players can be frugal too.
“At the end of the day, consumers will always value the ability to play their games on more platforms, but not if they have to pay for every copy or have to compromise across platforms to get that ability” , did he declare.
“Gamers who are willing to upgrade their hardware will not accept lower PC or console performance just to have access to content on all three platforms for the same price,” he concluded.
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