Market intelligence company Newzoo released a new study informing that the cloud gaming market would produce USD 6.5 billion in 2024 globally. This work follows previous analysis from the research firm. Progression shows that global cloud gaming market will reach USD 1.4 billion (the first time passing the coveted billion-dollar mark) by the end of 2021 (it was USD 633 million in 2020, a +121.17% difference) and USD 5.14 billion by the end of 2023 (+364% v. 2021).
The increase in revenue is partly due to the growth of cloud gaming users. By the end of 2021, it is projected that there will be 23.7 million paying service users. This indicator will expand to 60.7 million (+156%) by 2024.
Newzoo attributes this expected growth in cloud gaming for a number of reasons: new services are emerging (companies like Microsoft, Amazon, and Facebook) as current ones continue to expand and more publishers are using the system while releasing new titles. Besides, as technology progresses to create a better user experience, COVID-19 is still provoking challenges and it remains difficult for consumers to get new hardware.
WHAT IS CLOUD GAMING
Cloud gaming revenues can be defined as the amount the market generates in consumer spending on cloud gaming services: digital full-game purchases, in-game spending, and monthly fees to use the services themselves, as well as spending on game subscriptions that operate with cloud gaming services.
With gaming technology constantly evolving, upgrading hardware every few years is mandatory to enjoy the latest titles, but this comes with a large price tag. By connecting to devices in the cloud, costs are rapidly reduced to a subscription fee, and the provider takes on all the responsibilities of maintaining high-end gaming systems. With no need for on-site hardware, cloud gaming saves space in the home and eliminates the noise and heat generated by gaming machines.
Kantar’s Worldpanel ComTech shows that, due to COVID-19 lockdown, an extra 600,000 households started playing consoles on their TV in 2020 across the EU5 (France, Germany, Great Britain, Italy and Spain), presenting an opportunity to reach 19.3 million people in those European markets. Yet whilst consoles will continue to play an integral role in the industry, a revolution is on the horizon. Back in 2019, Phil Spencer, the head of Microsoft’s Xbox brand, announced the launch of Project xCloud, Microsoft’s venture into cloud gaming. Cloud gaming aims to do for video games what Spotify and Netflix have done for music and films: make them available on any device with an internet connection.
Part of 2021’s massive jump in cloud gaming revenues is due to increased cloud gaming activity from companies big and small. Some of them can be mentioned, such as Microsoft, Amazon, Facebook or NVIDIA. Smaller, independent cloud gaming services successfully targeted markets around the world, including emerging regions (via partnerships with local telcos).
In the near future, cloud gaming will allow consumers to play blockbuster titles on virtually any screen with an Internet connection, regardless of the hardware. The global rollout of 5G technology will ameliorate existing connectivity issues (lag being a major frustration for any online gamer), spurring further growth of cloud gaming throughout the next five years. Great Britain and the U.S. have the greatest 5G capable smartphone connectivity rates, with 54% and 59% of consumers connected to a 5G tariff, respectively. The space presents a significant opportunity for both existing players and prospective entrants. Competition is set to further intensify, and Google, Amazon and Apple have forayed into cloud gaming with mixed success. Netflix has also announced that it plans to launch mobile gaming within a year, making them initially available via its mobile app.
The cloud gaming’s future is unequivocally promising. While some of the bigger first-to-market services are facing challenges, these growing pains are common and necessary in young, fast-moving markets like this one. Simply put, cloud gaming is here to stay, and its importance and prominence will only grow.