The cloud gaming market appears to be poised for some significant growth, though it will be tough for new players to enter the scene.
In her newsletter published Tuesday, consumer technology guru Elizabeth Parks said the cloud gaming market is at an inflection point as heavyweights in the industry continue their involvement in it, and the popularity of gaming in consumer homes grows.
By 2021, 75% of leading US broadband households report playing video games for at least an hour a week, and 30% of those households admit to subscribing to or testing out a free or paid gaming service, according to Parks . Who is the President and CMO of Parks Associates in Edison, 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.
“Continuing advances in technology, growing expectations for entertainment consumption to be cross-platform, and the potential for cloud gaming inclusion in ecosystem strategies make this an interesting market to look forward to,” she said.
some new entrants
However, Parks predicted that there would be few new entrants to the market. He said that setting up and operating a cloud gaming service is extremely costly and challenging.
He continued, the most important requirement is performance-competitive cloud infrastructure. It is expected that if there are new entrants, given the status of existing competitors, it will be a party that is willing to employ the cloud resources of one of the existing competitors, or that they already have sufficient cloud computing. is infrastructure.
One place a new player can get the infrastructure is what it needs, said Ross Rubin, principal analyst at Reticle Research, a consumer technology consulting firm in New York City. “Google’s decision to focus on white label offerings indicates that it thinks it has better prospects in partnership than going as a first-party service alone,” he told TechNewsWorld.
The window for newcomers isn’t closed, but it can be narrow, he said. “It’s still a bullish market,” he said. “In contrast to the relatively expensive subscription end, there are more opportunities at the low-cost, ad-driven end of the market.”
battling established brands
Mark N. Venna, president and principal analyst at SmartTech Research in San Jose, Calif., agreed that conditions are becoming tougher for newcomers to the market.
“For companies that do not have a history in the gaming space, it is difficult to be seen as credible, as many established players have strong brand reputations around gaming, especially from the standpoint of a legacy gaming title, ‘ he told TechNewsWorld.
“Both Microsoft and Sony really captured the market a few years ago by grabbing some of the more prestigious gaming studios with franchise titles under their belts, which shuts down potential new entrants,” he said.
“Netflix, for example, is clearly trying to foray into the cloud gaming space and is running into difficulty because they don’t have well-known titles in their gaming arsenal and, more importantly, they are being used by consumers for gaming. Not considered as destination,” he said.
Established players can also trade losses for market share. “Microsoft has focused on using its cloud service as a losing leader. Most companies can’t afford to do that,” David Cole, an analyst at DFC Intelligence, a market research firm in San Diego, told TechNewsWorld. told.
Entering the gaming market is usually a daunting proposition to begin with, and doing it on the cloud poses additional hurdles, maintained Michael Inoue, a principal analyst at ABI Research, a global technology intelligence company.
“A new cloud gaming service will have a competitive disadvantage in most cases when it comes to game libraries,” he told TechNewsWorld. “Publishers aren’t ready to put their games on every cloud gaming service.”
“In some cases,” he continued, “publishers may push their own platform, enter into pre-existing deals with other cloud gaming services, or simply not agree to the business model.”
Still, Inouye said the market is huge and there are opportunities available for new players, especially in mobile gaming.
“Mobile-based cloud gaming, at least for premium services, can be challenging in many cases due to competition with free-to-play,” he said, “but may find success in the Asia-Pacific region because there “K gamers have shown willingness to pay for mobile game-based content, although revenue per player is low.”
Parks also predicted that consumer desire for aggregation in the video streaming market would extend to cloud gaming. Cloud gaming service customers can respond to marketing campaigns focusing on the simplicity of a single point of subscription, purchase, billing and consumption — one that allows them to play across platforms, she wrote.
Along with increasing the appeal of the services to consumers, he said, this aggregation approach potentially generates more revenue for game developers by increasing their reach and making it convenient for consumers to subscribe to their content services.
“More consumers are seeking cross-platform gaming experiences so that they can experience and participate in gaming, regardless of the device they are using – console, smartphone, tablet, PC, or even… That Chrome laptop,” explained Vena.
“Gaming has now become a multi-platform phenomenon and gamers do not want to be affected by gaming on a single device or OS platform,” he continued. “This is a result of the multi-device world we live in now, which is only to grow in importance as 5G connectivity becomes more widespread.”
Inoue agreed that there is a growing demand for cross-platform titles as a whole, and gamers especially appreciate it when buying games cross-platform — meaning, if you buy a game for a console, you have There’s access to the PC version – but gamers can be frugal, too.
“At the end of the day consumers will always welcome the opportunity to play their games on more platforms, but it’s not like they have to pay for every copy or settle on all platforms to get that capability,” he said. .
“Gamers who are willing to upgrade their hardware will not accept poor PC or console performance just to gain access to content on all three platforms for the same price,” he concluded.