Cloud gaming makes perfect sense. Instead of hardware, the necessary processing power can be run on remote cloud servers, meaning players can stream games. Assuming fast internet connections are available, gaming could attract a much larger audience if not tied to expensive consoles.
Still, multiple attempts to start streaming for video games have failed. OnLive debuted over a decade ago, stating that any internet-connected device could become a gaming interface. Users complained about blurry graphics and customer service was shut down by buyer Sony. Google’s technical prowess solved these problems when it launched the cloud gaming service Stadia a few years later. Still, Stadia has since shut down.
Companies are still trying. Amazon Luna, Nvidia’s GeForce Now, and Microsoft’s Xbox Cloud Gaming are all competing for users. Netflix plans to join them. Newzoo says revenue for the cloud-based gaming sector grew 73 percent last year to $2.4 billion. But this only represents about 4 percent of the console gaming market and is only 2 percent the size of mobile gaming. Both the market and the business model are evolving.
Microsoft may have set the industry on fire. It cannot compete with Sony in terms of console sales. In the last quarter, Microsoft Xbox sales fell while Sony shipped three times as many PlayStation 5s as last year. It has a better chance in cloud gaming.
But Britain’s antitrust regulator rejected its bid to buy Activision Blizzard, worried that Microsoft would release popular Activision games like Duty to corner the market. American watchdogs are also fighting this deal.
Cloud services still lack exciting, exclusive titles. Netflix became popular because it was convenient and because it had popular shows to stream like House of cards.
Cloud gaming services need something similar. Users don’t want to pay $15 a month or have in-game ads stuck playing the same old thing. Cloud gaming can still take over the industry, but only if it delivers better content.
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