Despite representing a meager 1 percent of video games industry revenue in 2020, Cloud gaming is set to fundamentally disrupt the distribution, consumption and monetization of gaming in the next ten years.
According to GlobalData, Cloud gaming will grow at a compound annual growth rate of 40 percent to 2030, as it has the potential to disrupt the industry, having a huge impact on how games are distributed, consumed and monetized.
“In ten years, traditional PC and console games will have been replaced by games hosted in the cloud and accessed via thin-client PCs, consoles, or mobiles.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,” said Associate Project Manager, Rupantar Guha at GlobalData.
Three key impacts of cloud gaming as outlined by GlobalData in its 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.