Companies look to corner the cloud gaming market as technology arrives for streaming playable video games
In 2018, the video game industry saw record-setting revenue of $43.8 billion in the U.S., with free-to-play games such as Fortnite earning more than $87 billion worldwide. Such revenue puts gaming ahead of both the film industry and the streaming services industry in terms of profits — which led to a 2018 fourth quarter letter to shareholders from Netflix which famously stated, “We compete with (and lose to) Fortnite more than HBO.” If some of the biggest game developers and tech companies are successful in developing platforms for streaming playable video games (cloud gaming), that competition could become considerably more formidable.
The Market for Streaming Games
When a streaming service for cloud gaming (“The Netflix for video games,” the hypothetical service has been called) arrives, it will be doing much more than tapping into the already massive video game market. It will be a way to appeal to new customers as well as old ones who no longer keep up with the latest consoles or hard drive upgrades. Essentially, it eliminates the initial investment of buying the hardware required to play games, making choosing the game as easy as choosing a movie or TV show on Netflix or Hulu. Not only that, players can maintain progress on games while switching from mobile devices to computers and smart TVs.
Another distinct advantage for consumers is the exposure to games they otherwise wouldn’t play. The ability to scroll through pages of games and try out one based on genre, name, or word-of-mouth is sure to appeal to gamers who do not want to haphazardly spend their money on the latest blockbuster title (known by gamers as AAA titles). Similarly, casual gamers who currently spend more time playing passive games on their phones and tablets and are more intrigued by niche games than the big-name offerings may be drawn to subscription services to find new games.
Currently, YouTube and Twitch are filled with channels devoted to gamers streaming videos of their gaming to thousands and even millions of watchers. The most popular streamers can make more than $1 million per year, with Twitch streamer Ninja holding the record for more than 250,000 subscribers (for which he earns $3.50 each per month) and a stream of his Fortnite playing that tallied 628,000 concurrent viewers. If such a market exists for watching others play games, one can only imagine the available revenue for a platform offering cloud gaming.
Online gaming is certainly nothing new — millions have played everything from Quake to Minecraft with and against players from around the world — however, previous games have merely connected players to servers. Streaming playable games is much more difficult. Whereas streaming music, movies, and shows mostly requires information only to be sent one way, video games require interaction.
The amount of extra code that needs to be added to instantly convert a gamer’s reactions into corresponding graphics is massive — and the amount increases exponentially for multi-player games. In competitive games. The lag time that results from hardware or connections being unable to keep up with incoming information, known as latency, can ruin the experience.
To avoid latency, platforms that have been looking to gain early entry into the soon-to-be-crowded field of cloud gaming services such as NVIDIA’s GeForce Now and Google’s beta version of its cloud gaming project known as Project Stream required strong internet connections and download speed of a minimum of 25Mbps. Before there is widespread acceptance of streaming video games, the system requirements will need to decrease.
Fortunately, telecommunications technology is quickly reaching the point where rapid data transfer is prevalent enough that latency could no longer be an issue. One factor helping to bring streaming video games to the masses is a wider dispersal of servers to make cloud gaming, and the necessary exchange of information, more efficient.
The other technological breakthrough that will enable cloud gaming is 5G. According to PC Mag, 5G wireless will offer far higher speeds than 4G LTE, while “aiming at 20Gbps speeds and 1ms latency, at which point very interesting things begin to happen.” 5G was unveiled in late 2018 as a home service by Verizon in a handful of cities, while AT&T began running mobile hotspots in 12 cities around the same time. This development has companies champing at the bit to secure their piece of the cloud gaming market.
From game developers to tech companies with already existing cloud computing capabilities, big-name companies are positioning themselves to become “the Netflix of video games.” At the recent Game Developers Conference (GDC), Google threw down the gauntlet by unveiling its plans for Stadia, which promises to be a ground-breaking cloud gaming service. The following day, an internal memo from Xbox head of gaming Phil Spencer in which he praised Google’s innovation but quickly teased big news from Microsoft during June’s E3 conference was published by Thurrott. Things are definitely heating up on the cloud gaming front.
Sure, some have already unveiled early versions of their cloud gaming platforms and others have the distinction of big name brands, but it is unclear who will emerge as the true leader in the next generation of gaming; there could even be multiple winners sharing the market almost equally. Below is a look at some of the notable competitors:
- Amazon: In 2014, Amazon bought Twitch for almost $1 billion, and in 2018 it unveiled Lumberyard, its game engine available through AWS. Lumberyard allows developers to create AAA-caliber games that feature full Twitch integration, without sharing royalties. The company also has plans to develop a game streaming service of its own.
- Blade Shadow: Blade’s Shadow is a high-end gaming computer that exists in the cloud and provides access to high quality games from any internet enabled device. Blade received funding from Charter Communications — a cable provider with 28 million customers — and has been building data centers across the United States.
- Electronic Arts Project Atlas: Project Atlas will take advantage of EA’s Frostbite engine — which powers such hit games as Madden, FIFA, and Dragon Age — and combine it with the power of AI and cloud computing. It looks to be a different form of cloud gaming that allows for socializing and increased creative control for gamers. In a statement, EA CTO Ken Moss wrote, “By blurring the line between content producers and players, this will truly democratize the game experience.”
- Google Stadia: Introduced at the 2019 GDC, Google claims Stadia will launch sometime in 2019 and feature 1080p, 60 frames per second (fps) gameplay while supporting Unreal and Unity game engines, and Vulkan API. Most impressively, Stadia incorporates YouTube and Chromecast to allow players to join in any game by pressing the “Play Now” button to start a game in as little as five seconds. The Stadia controller has a “Capture” button that allows users to livestream gameplay or share it later on YouTube, as well as a Google Assistant button that helps if a gamer is stuck in a game.
- Jump: Those more into indie games than AAA titles can turn to Jump, which offers streaming games on Macs or Windows or Linux PCs. All games are available for a $5 monthly subscription with 70 percent of the cost going back to developers. Jump supports HTC Vive and Oculus Rift headsets for VR gaming.
- Microsoft Project xCloud: When it was announced in October 2018, Project xCloud was slated for public trials in 2019. More recently, Microsoft teased a big day at the E3 conference and published a blog explaining that the cloud gaming service is meant to complement Xbox hardware as well as to “open the world of Xbox to those who may not otherwise own traditional, dedicated gaming hardware.” The company has an advantage in low-latency streaming thanks to its access to Microsoft’s global distribution of data centers.
- NVIDIA GeForce Now: Still in beta testing, NVIDIA’s GeForce Now democratizes gaming in a different way. The cloud gaming service allows subscribes to play AAA games on even low-end PCs and Macs, as well as Shield TVs. Games must be purchased through digital stores such as Uplay and Steam, but subscribers access the GeForce cloud through an app to run the games.
- Nintendo: Nintendo has been slow to adopt online gaming features throughout its history, but the long-running company has already unveiled cloud versions of Assassin’s Creed Odyssey and Resident Evil 7 for the Switch in Japan. Running games through the cloud allows Nintendo Switch users to play AAA games that typically wouldn’t run on the system — an added bonus is the mobility of the Switch which allows gamers to take a portable version anywhere.
- PlayStation Now: PlayStation Now not only streams hundreds of games from the vaunted PlayStation catalog on PlayStation 4 consoles, it allows those without one to stream and play games on PCs with only a DualShock 4 controller and a USB mini cable or wireless adapter. Save files can be accessed on both PC and PS4 and a $20 per month subscription includes multiplayer support.
- Verizon: According to a January article on The Verge, Verizon has been quietly setting up its own entry into the cloud gaming market with a platform that is running on the NVIDIA Shield with hopes to soon have it on Android devices. If a leaked screen shot showing titles such as FIFA, Fortnite, God of War, and Red Dead Redemption is any hint of what’s to come, Verizon should have no shortage of AAA games to stream on its expansive network.
Full Stream Ahead
Exactly which cloud gaming services rise to the top is yet to be determined as companies with large amounts of capital and dedicated followings duke it out. What is certain is that it will be exciting to watch the competition unfold and there has never been a better time to be a gamer.