6 min read • Feb 10, 2021
Aishwarya Jagani is a freelance tech and finance writer from Mumbai, India. She writes on cybersecurity, science, and the human impact of technology.
As tech companies scrambled last year to come to terms with a rapidly changing digital landscape, cloud gaming witnessed significant growth and investment, with more to come in 2021.
2020 was an entirely unprecedented year, with the pandemic disrupting almost every industry, and completely annihilating some. But ‘gaming-as-a-service’ or cloud gaming grew by leaps and bounds, generating a revenue of $159.3 billion in 2020, a year-on-year growth of 9.3%. While cloud trends continue to appear in different industries, gaming is no different.
Cloud gaming works by hosting and running games on powerful remote servers, and sending a video stream of the action to your gaming device via the internet.Tech giants have thrown their weight behind this form of gaming in a big way. Microsoft made an announcement to bring cloud gaming to PCs and iOS devices by spring 2021, with Xbox Game Pass Ultimate, that lets users play Xbox games on non-Xbox devices. Google and Nvidia teamed up to bring cloud gaming to LG’s smart TVs in 2021. And Amazon announced Luna, its cloud gaming platform, in September of 2020.
A report by Mordor Intelligence valued the cloud gaming market at $1.15 billion in 2020, and predicted it would grow to $2.7 billion by 2026, at a compound annual growth rate of 15.3% from 2021 to 2026. As we inch towards a future where almost everything - entertainment, work, security, storage - is on the cloud, a few key trends could shape the adoption of cloud gaming in 2021.
Low latency and high speeds are critical to cloud gaming, particularly in competitive games where a delay lasting even a millisecond could mean the difference between winning and losing.
With the blazing fast internet speeds 5G will bring, it will enable more detailed and complex games to be rendered via the cloud. This will let users play high-end games on devices such as laptops, tablets and even smartphones.
Not only will 5G enable a significantly better gaming experience, it will let mobile gamers, a rapidly growing gaming cohort, join competitive, high-stakes gaming in a big way. Initially, mobile gaming was limited to relatively simpler games like Candy Crush or Temple Run. But over the last few years, with increasing internet speeds, mainstream console titles such as Call of Duty have made their way to mobile devices.
The advent of 5G will accelerate this trend, letting mobile users stream and play high-end games via the cloud.
Remember when we bought or rented DVDs to watch movies and filled our shelves with CD collections to listen to music? The rise of subscription-based services like Netflix and Spotify changed the way we consume music and movies. As cloud gaming gains ground and negates the need to download or buy games, subscription-based gaming services could become as commonplace as Netflix.
Since 2012, the subscription economy has grown 5X faster than the retail economy, and a study conducted by Parks Associates predicted the US cloud gaming market stands to generate nearly $3 billion in annual subscription revenue.
Microsoft, Sony and Apple have all launched gaming subscription services in the last 5 years. A study by Limelight had 44% of gamers globally reporting they would subscribe to a gaming service.
This trend seems to be taking hold and staking its claim.
Despite multiple optimistic predictions over the last decade, virtual reality in gaming hasn’t really taken off and become mainstream. With popular virtual reality consoles like Facebook’s Oculus Rift priced at $399, and the PCs necessary to run such consoles setting gamers back by $1,000 or more, VR gaming is an expensive proposition.
High-end, power-hungry games could be rendered entirely in the cloud by taking VR there too, eliminating the need to buy expensive PCs and the associated cost of updating them every few years. This slashes the costs associated with VR gaming by at least a third, making it more financially accessible to gamers.
In 2020, as the world embraced social isolation, gamers got their fix of social interaction via social or community gaming. Social gaming comprises real-time, multiplayer games like Animal Crossing, PubG or Clash of Clans. Just like social networking was the defining trend for the millennial generation, Gen Z has built entire communities and forged bonds around the act of social digital gaming.
Cloud gaming negates the need for expensive gaming consoles or high-powered PCs, huge amounts of storage space or a high-resolution screen. With everything being hosted remotely, a strong internet connection enables gamers to use any device to play--old laptops, smartphones, TVs, even fridge screens.
By making gaming more accessible, cloud gaming will supplement the growth of social gaming, leading to larger, more diverse gaming communities.
Gaming consoles like Microsoft’s Xbox, Sony’s Playstation and Nintendo’s Wii can easily set one back by $500 or more and tends to be the most expensive part of participating in serious gaming. Cloud gaming could change that forever.
Ubisoft co-founder and CEO Yves Guillemot told Variety in a 2018 interview that cloud gaming could end the need for gaming consoles entirely, in just one generation.
“I think we will see another generation, but there is a good chance that step-by-step we will see less and less hardware,” Guillemot said. “With time, I think streaming will become more accessible to many players and make it not necessary to have big hardware at home.”
“There will be one more console generation and then after that, we will be streaming, all of us.”
While 2021 might be too early for this trend to play out, consoles are definitely on their way out.
The cloud gaming industry has historically been plagued by false starts and lofty predictions that have since fallen flat. However 2020 has seen significant progress, both in industry investment and in adoption of the technology. With the launch of a number of gaming consoles, Microsoft’s new cloud gaming service, and other exciting developments, cloud gaming enthusiasts have a lot to look forward to in 2021.