Gaming Industry: The rise of Cloud Gaming and Amazon’s Plans

Playing games is without doubt a ubiquitous leisure and entertainment activity. Gaming is particularly appealing to younger people especially those aged 18-24, with men playing much more than women. Moreover, as expected, high incoming individuals tend to spend the most significant amounts in game purchases. Nevertheless, in total many people from different ages and across many different counties spend some of their free time playing games. Hence, the number of gamers worldwide is estimated to be more than 2 billion and continually rising, which has created a thriving market that exceeds $130 billion in value for 2018. During the last couple of years, the market has been growing based on rates of over 10% per annum.

The lion’s share of the market concerns revenues from digital games, which are estimated to represent an approx. 90% of the total market value. Furthermore, mobile gaming (i.e. playing on mobile devices) is currently the most important part of the digital segment of the market, given that it currently contributes almost 50% of the total revenues. In this landscape market leaders and internet/cloud giants are rolling out innovative products in order to compete for market share.

For over five years, gaming consoles like Play Station (PS) and XBOX have been dominating the market and gaining popularity among gamers. However, the world of gaming is evolving in order to improve user experience and offer more convenience to end-users. Specifically, gaming platform providers are working towards enabling gamers to play the games they want, with the partners and friends they want, regardless of time, device and their location. Gaming experiences will therefore become similar to music and movies: They will be accessible from different screens on demand.

Gaming Platforms’ Evolution

The evolution of gaming is reflected in the latest products and services of major gaming vendors. In particular:

• Project xCloud (by Microsoft): Microsoft’s Project xCloud is bringing more freedom and options to gamers: It allows gamers to play both in their console or in a PC depending on their preferences. It also enables mobile-only players to access worlds, characters and immersive stories, as a means of improving their user/player experience. In these directions, Project xCloud facilitates developers to bring their content to Project xCloud. In particular, Project xCloud supports directly the thousands of games that are available on Xbox One. Moreover, developers will be provided with easy options for deploying games across all Project xCloud supported devices in a flexible and very scalable fashion.
• GeForce Now (by Nvidia): Nvidia uses “GeForce Now” in order to brand the company’s cloud gaming services. One of these cloud gaming services is Nvidia Shield, a subscription-based offering that allows users unlimited access to a library of games hosted on Nvidia servers. Shield is a streaming video service, which provides subscribers with lifetime access to the games of the library, yet certain titles are also provided based on a ‘Buy & Play’ model. Note that Nvidia Shield games are available exclusively on the company’s Shield Portable, Shield Tablet, and Shield Console devices. Nvidia’s GeForce Now comprises also a cloud gaming service for PC and Mac computers, which is based on remote desktop delivery modality. This means that users rent access to a virtual computer residing in Nvidia servers, which they can use to install their existing PC games from digital distribution platforms, and play them remotely.
• Playstation Now (by Sony): Playstation Now delivers unlimited access to a growing library of over seven hundred (700) games running on the PS4, PS3, and PS2 consoles. Access to these games is based on a single subscription. It allows streaming of games directly to PS4 or PC, while also enabling the downloading of PS4 & PS2 games to the PS4 console. PlayStation Now is therefore Sony’s cloud gaming subscription service and main vehicle to compete with the other providers in the future gaming market.
• Project Stream (by Google): Project Stream is Google’s latest gaming platform, which was launched during the second semester of 2018. The platform aims at facilitating gamers to access all popular titled in their Google Chrome browser. In order to attract participants to the gaming platform, Google is giving away a free copy of a popular title (i.e. “Assassin’s Creed: Odyssey”) for PC in exchange for a Project Stream trial i.e. using the streaming service for an hour. The service is currently available for US residents as a first step to building a community around the platform.

Amazon’s Plans

In this landscape, Amazon is planning to aggressively enter the gaming market. The company has already a footprint in the market, based on its Twitch live streaming video platform. Twitch is owned by Twitch Interactive, which is a subsidiary that Amazon acquired four years ago.  Twitch emerged in 2011 as a spin-off of an earlier streaming platform (Justin.tv) in order to provide video game live streaming, along with sports broadcasts, music broadcasts and creative content. Its users can access content either live or based on a VOD (Video On Demand) modality.

Twitch has much smaller momentum and market share than competing platforms, which means that Amazon will have to roll out more innovative and differentiated services than what is currently provided by Twitch. In this direction, Amazon is thinking of offering video games that can be played without a need to download them. This unique selling proposition could be combined with hardware and device flexibility in order to allow Amazon to position itself in the competitive landscape. The company will capitalize on the company’s excellent cloud hosting services which have set it apart from the rest in other markets. Hence, the launch of Amazon’s service will allow the company to compete against the earlier outlined cloud gaming platforms.

Since many years the gaming industry is driving innovation in user experience and providing pleasure to billions of citizens worldwide. Despite their success and established base of users, gaming providers need to continually evolve and sometimes reinvent their services. Whether a powerful cloud provider can enter and disrupt the cloud gaming market remains to be seen, even in the case of Amazon itself.