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As gaming hardware becomes increasingly obsolete, game makers are shifting their focus to the cloud. The cloud gaming industry remains nascent, but major players are staking out their influence in the space.
The potential of the cloud gaming industry is massive: In October, Newzoo estimated that a likely 31.7 million users could spend a combined $2.4 billion on cloud gaming services and games by the end of the year, and projected those numbers to reach $8.2 billion by 2025 with an estimated user count of 86.9 million.
However, even with its potential, cloud gaming still faces significant roadblocks that have thus far held it back from becoming the standard way to play games.
Sony CEO Kenichiro Yoshida recently told the Financial Times that despite the company’s push into cloud gaming with its PlayStation Plus subscription service, cloud gaming is still limited by persistent problems, with the biggest issue being latency in the tech.
“I think cloud itself is an amazing business model, but when it comes to games, the technical difficulties are high,” Yoshida told the Financial Times. “So there will be challenges to cloud gaming, but we want to take on those challenges.”
Sony first moved into cloud gaming with its $380 million acquisition of Gaikai in 2012, followed by OnLive in 2015. It debuted its first cloud gaming product in 2014 with PlayStation Now.
Microsoft, meanwhile, has made the cloud the centerpiece of its next-gen gaming strategy. While it is unlikely to surpass Sony in pure console hardware sales, Microsoft’s Xbox has focused on delivering its games through a licensing-first strategy, while fully embracing the cloud through its Game Pass subscription service, enabling non-Xbox gamers to play on phones, PCs, and TVs.
“As long as they’re the company that’s delivering the service, facilitating a service from some other development studio, or it’s a first-party studio coupled with Xbox services, they’re happy either way, because they’re making money off both those slices of the pie,” Lewis Ward, research director of gaming, esports, and VR/AR at IDC, told Tech Brew in March.
Xbox expanded its Xbox Game Pass subscription gaming service to the cloud in 2021, and has spent the last two years fine-tuning its service, with an update in May enabling mouse and keyboard support as well as improving latency.
Google’s cloud gaming service, Stadia, shuttered in January of this year, while Amazon Luna closed down its Windows and Mac apps. Amazon told 9to5Google that the decision was made because gamers were using Luna through their web browser more often than through the native apps.
When we playtested Amazon Luna back in 2021, the experience was mostly stable between devices, but did suffer from resolution and latency dips, as well as game crashes and lost data.