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What is cloud gaming? The Netflix-style streaming tech that could transform a $140bn industry

Cloud gaming promises to make video games more accessible by letting users stream the industry's latest releases straight to their local device

The enduring popularity of video games often comes down to their accessibility in numerous formats – with cloud gaming the next stop.

Some 64% of people in the US are gamers, according to a 2017 study by US data measurement company Nielsen, with recent releases such as 2018’s Red Dead Redemption 2 selling more than 17 million copies across the world in little over a week.

Market insight firm Newzoo estimates the global video game industry is worth about $140bn (£106bn), while Statista predicts the number of PC gamers alone will reach 1.4 billion worldwide by the end of 2021, representing a significant chunk of the market.

One barrier for PC users, however, is the expensive costs associated with the hardware necessary to play the most demanding releases.

Like Netflix, Spotify and YouTube, game developers are beginning to identify the benefits of cloud computing – which can provide on-demand and high-quality services over an internet connection, with minimal maintenance.

 

What is cloud gaming?

Cloud gaming, sometimes known as on-demand gaming, is closely linked with the concept of video streaming.

A cloud gaming server will run a game and stream a video of the gameplay to the user, whose mouse and keyboard communicate directly with the remote server rather than their local device.

The server, based in a data centre somewhere, does all the heavy lifting – meaning users can play even the most graphically-demanding video games on any device that can present it in video format, from their own PC to their smartphone.

The technology was first demonstrated at the 2000 edition of E3 – the biggest conference in the video game calendar.

However, it has only become commercialised in recent years, with industry giants like Electronic Arts, Google and Microsoft revealing their own work in progress iterations of the service in late-2018.

what is cloud gaming

Pros and cons of cloud gaming

The biggest advantage offered by cloud gaming is the amount of money users could save by not having to invest in upgrading their PC hardware in order to play new and future releases.

Most cloud gaming subscriptions cost somewhere between £10 and £20 a month, while modern graphics cards can set customers back close to £1,000 – not to mention the costs of sound cards, processors and motherboards that tend to require replacement every few years.

The service also means people without a console or high-end PC could play non-mobile video games, with Android, iOS and other systems capable of displaying the stream needed to make it possible.

However, arguably the biggest downside is the fact that cloud gaming requires a continuous internet connection because, if the server is disconnected, the entire process has to be restarted.

Moreover, playing over a network rather than on a local device inevitably leads to occasional latency issues where there is a delay between the server and the video stream, leading to an incomplete experience for the user.

 

Which companies are working on cloud gaming?

In October 2018, Google launched Project Stream, a cloud gaming platform for streaming high-end video games in the Chrome browser.

It has yet to be packaged as a public consumer service, however, with the Silicon Valley giant only making it available to a select few people with particularly pacey internet speeds.

Microsoft’s Project xCloud service will begin public trials sometime this year, though the company has stated its first priority is to its Xbox console customers.

And PlayStation’s creator Sony offers PlayStation Now – but this requires a PlayStation console to use, removing much of the benefit cloud gaming is meant to bring.

Some smaller companies have released cloud gaming services, such as Liquid Sky’s product of the same name.

The New York-based tech firm raised almost $12m (£9m) in funding and launched its service in 2017.

It has cloud gaming servers in several US states, London and Hong Kong, among other locations.

 

What do the analysts say about cloud gaming?

Given that the PS4 and Xbox One were released in November 2013, it’s usually around this time that the big-hitters would be preparing to launch their next-generation consoles.

But consumer tech analyst Avi Greengart doesn’t expect these to be released until 2020 due to the Sony and Microsoft’s focus on cloud gaming.

In a report titled 2019 Predictions: What to Expect in Consumer Platforms and Devices, Mr Greengart, research director for consumer platforms and devices at data intelligence company GlobalData, says: “The bigger story will be Microsoft’s launch of xCloud game streaming.

“More than just a competitive response to similar services from Sony and Nvidia, xCloud is the ideal combination of Microsoft’s consumer brand and its Azure cloud platform assets.

“xCloud could also be a way for Microsoft to get into mobile in a meaningful way without owning the mobile OS, if Microsoft can piggyback on low-latency 5G mobile networks starting to be deployed in 2019.”