A New Era of Gaming – What Is Cloud Gaming Going to Change?
One of the industries that is thriving during the pandemic is gaming, as previously discussed here. Aside from AR & VR trends which have become more and more a mainstay in the gaming industry, there is another trend that is equally important – Gaming as a Service (GaaS). GaaS or cloud gaming not only survived the pandemic, but it actually grew by leaps and bounds.
According to Deloitte, in 2020, a third of consumers subscribed to a video gaming service for the first time. This interest is expected to continue to increase even more in the years to come. In fact, Cloud Gaming growth is expected to reach more than 7 billion USD by 2027.
Similar to Software as a Service (SaaS), GaaS incorporates an ongoing revenue model which helps developers to continue to monetize their video games long after the initial release. Increasingly, video games are created to withstand the test of times. Gone are the days where game developers can only rely on physical game sales. Nowadays, the trend is to release a game for free (free-to-play / F2P) and instead, have a steady revenue stream through –
- Micro-transactions (low cost purchases for additional content in a game)
- Downloadable content (DLC) through a range of subscription-based options
This also means that with GaaS, the game will continue to evolve beyond the initial release as more and more new content is released, and with it, the player community will also evolve. As the game remains accessible for free, it can continue to entice more potential players. GaaS is definitely here to stay and marketers would do well to remember that engagement is crucial, regardless of what subscription model they have in place.
So what are the TOP trends in GaaS for 2021 and beyond?
Rising popularity of subscription-based cloud gaming
Think Netflix, but for gaming. Subscription-based gaming services are gaining ground and negate the need to download or buy games. Microsoft, Sony and Appel have all launched their gaming subscription services in the last few years. A recent global study also shows that almost half of gamers would consider subscribing to such services. In the US alone, subscription-based cloud gaming is poised to generate nearly $3 billion in annual subscription revenue.
5G opens up a whole world of new opportunities
High speed and low latency is crucial for a great gaming experience, even more so for GaaS / cloud gaming. Particularly in the ever so popular shooter or battle arena games, any slight delay (even in the milliseconds) can make a huge difference between winning or losing.
The faster 5G will not only enable smooth connection; but it will also enable more detailed and complex games to be rendered via the cloud (i.e. players can enable the highest setting without worrying about reduced connection speed due to the load). It will result in a significantly better gaming experience. This is especially important for mobile gamers who traditionally were limited to simpler / more casual games like Candy Crush. 5G connectivity allows mobile gamers to also partake in high-fidelity games like Call of Duty or League of Legends (Wild Rift).
Gaming communities are the new age social networking
As social distancing become the norm due to the pandemic, people started looking for new ways to interact with others, and gaming is a great solution. Gamers got their fix of social interaction via social and community gaming. Multiplayer games like Animal Crossing, PubG and Clash of Clans see a huge increase in player-base during the pandemic. In fact, a recent report shows that while Social Networks was the defining trend for Millenials, for GenZ’s it was gaming communities.
The end of gaming consoles?
Gaming consoles used to make up the largest portion of the video gaming industry. However, with the rise of PC & (even more so) mobile gaming, gaming consoles have seen their position contested. And it is clear why people are moving away from gaming consoles. They are simply a rather costly investment (the latest releases costing easily above 500 euros).
In an interview back in 2018, Ubisoft co-founder and CEO, Yves Guillemot mentioned that cloud gaming could end the need for gaming consoles entirely, in just one generation! While consoles are still holding on even in 2021, their declining sales performance over the years indicate that they are definitely on their way out.
How can we help?
At ADK Insights, we continue to monitor trends in the fast changing space of gaming and to forecast how their impact will influence consumer behaviour, advertising models and media consumption in general.