28 May 2020
Posted in Business Fundamentals
Cloud and 5G related discussions rising in the gaming industry
Traction towards gaming-on-demand is fueling the migration of games to the cloud while trying to utilize the peak speed abilities of 5G, says GlobalData, a leading data and analytics company.
‘Cloud’ and ‘5G’ have become rising topics of discussion in the gaming industry in 2020 as tracked by GlobalData’s Filing Analytics platform. Mentions of these terms in earnings transcripts of companies in the gaming industry witnessed double digit growth in Q1 2020 when compared to Q1 2019. Nvidia GeForce Now, Google Stadia, Playstation Now and Microsoft’s Projext xCloud are some of the top cloud gaming services mentioned.
Rinaldo Pereira, Senior Analyst at GlobalData, says: “Following the video streaming industry trend, subscription models will cause a shift in the gaming sector due to the dawn of cloud services. The expansion of cloud 5G gaming is attractive for telecom operators – with consumers accustomed to paying for subscriptions in the industry, network operators with the right assets will gain growth and competitive agility in the lucrative market.”
Telecom companies have started collaborations with gaming-related companies for the rollout of 5G cloud gaming. An example is a partnership between Microsoft and SK Telecom, while Tencent and Huawei collaborated to work on the development of a mobile cloud gaming platform.
Pereira adds: “Cloud gaming might decrease the use of consoles due to a shift towards mobile gaming devices. Console manufacturing companies such as Microsoft, Sony and Nintendo will face intense competition from telecom company collaborations and big tech companies such as Apple and Google.”
Furthermore, lockdowns and stay-at-home orders due to the coronavirus pandemic have caused Nvidia and Microsoft to see an increase in network traffic on their cloud platforms. In the US and Europe, Nvidia GeForce game streaming service slots were sold out. Steam also saw the number of users reach 23.5 million by late April 2020, up from 16.5 million in mid-March 2020.
Pereira concludes: “Cloud gaming is likely to disrupt the gaming industry. However, the spread of the contagion has caused a slowdown in the expansion of 5G due to lockdowns. Pioneer companies offering cloud gaming services will gain footholds in the market. However, newer players will struggle with slower rollouts due to network constraints amidst the pandemic- an example is Amazon’s Project Tempo which was pushed to 2021.”