Written by Feliks Olko

10 min read

Cloud Gaming Newsletter: January 2020

  • Gaming

Major Industry Developments

The Key Stories from this Month

Notable M&A's:


Cloud Wars: the the Empire Sticks Back

Microsoft’s Xbox boss, Phil Spencer, says Amazon and Google are ‘the main competitors going forward’ – Sony and Nintendo cannot compete in cloud gaming future.

Phil Spencer Microsoft Xbox

“When you talk about Nintendo and Sony, we have a ton of respect for them, but we see Amazon and Google as the main competitors going forward.

That’s not to disrespect Nintendo and Sony, but the traditional gaming companies are somewhat out of position. I guess they could try to re-create Azure, but we’ve invested tens of billions of dollars in cloud over the years.”

The business isn’t how many consoles you sell, you don’t want to be in a fight over format wars with those guys while Amazon and Google are focusing on how to get gaming to 7 billion people around the world,”

The comments are surprising given that Google’s Stadia platform has been a complete flop so far and Amazon still hasn’t announced a cloud gaming streaming service of its own. Not only that but Microsoft has been consistently saying that cloud gaming will not be ready to take over from consoles for some time yet, with Microsoft’s own Project xCloud still only in beta.

The one player that is not talked about much but has been operating in stealth is Facebook, and it has made big bets on Cloud Gaming with its Instant Games Platform.

Last December, Facebook claimed that over 20 billion game sessions had been played across 5,000 titles, which formed the foundation of a gaming ecosystem within its own apps. This coupled with Facebook's recent acquisition of PlayGiga ($78m), might put them on the map. But is it enough to impress Phil? 

It's unclear if Facebook plans to aggressively compete against PS Now, Google Stadia, or Project xCloud, but the growth of Instant Games, Facebook Gaming, and Oculus suggests that it has the momentum to launch a cloud gaming service.

Lastly, lets not forget about the recent launch of NVIDIA's GeForce NOW. Phil Eisler, the Vice President and General Manager responsible for GeForce NOW, said that NVIDIA had about a million people on its waiting list for the platform – which is the only platform offering to players a free access on top of premium. 

GeForce Now's pricing options.

NVIDIA's GeForce NOW service originally used first-generation servers based on Pascal graphics processing units (GPUs), and now it is switching to Turin-based GPUs such as the RTX cards. Depending on circumstances, each GPU can handle one or two users.

Eisler added “This may be the first time that they are able to experience real-time ray tracing,” Eisler said. “The next generation of computer graphics — we’re making it available across all of our devices.”

As of today, hardware-based solutions (GeForce NOW) still outperform cloud-based ones (Stadia, xCloud etc), in terms of latency and FPS, and will continue for a bit longer... as they are not built for purpose.

Once the industry makes the shift towards cloud-native development and game design, the true opportunity will become apparent.


A New Era for Game Engines
The next generation of games and game development

Online multiplayer video games require extremely fast internet connectivity and information transfer between individual players and the centralised servers hosting matches. Much of the buzz around cloud gaming has centred on its potential to “kill the console” — to remove the need for local hardware to play games.

But the ongoing focus on hardware fails to grasp cloud gaming’s true potential. The real innovation in cloud gaming won’t simply be in how we play, but what we play: cloud-native games will completely upend the gameplay experience itself, as well as how those games are marketed and sold.

Besides greater virality, cloud-native games will also enable new forms of marketing for AAA games, which have traditionally relied on retail marketing such as billboards and display ads. With no install times, prospective buyers will be able to click a link to immediately try a game — a huge advance.

Moreover, because the client and server are in the same network, cloud-native games can track and collect data on almost every aspect of a user’s journey. This trove, conveniently stored in data warehouses in the cloud, can empower AI and machine learning in games in groundbreaking new ways.

"The engine of the future: it’s built for the cloud and it has a modular architecture. The promise of cloud gaming is enchanting and we truly do believe in it, but there are technical limitations that make it difficult for game developers.

Origami is built in such a way that helps mitigate a lot of these limitations by taking better advantage of the resources available to it. The timing is ideal for new technology that can fully access the power of modern chipsets that will drive both cloud gaming and the new consoles from PlayStation and Xbox."

– Roberto Rodruigez | Vital Reality (Origami Engine)

If you want to find out more have a read of our recent article titled "Cloud Gaming Today Is ‘Lazy Cloud’, Cloud Gaming Tomorrow Is Cloud-Native and Easy".

 


The Mobile Games Market 

2019 was another stellar year for mobile game revenue. Sensor Tower estimates show that worldwide spending in games grew 12.8% across the App Store and Google Play, from $54.7 billion in 2018 to $61.7 billion in 2019.

2019 Mobile App Revenue

For some perspective, that's 74% of all in-app spending for the year, which hit approximately $83.5 billion in total not including Android in China.

The top five was rounded out by Sony Aniplex's Fate/Grand Order – which became Japan's top grossing game of 2019, usurping Mixi's Monster Strike – King's Candy Crush Saga, which increased user spending by $84.5 million year-over-year, and Niantic's Pokémon GO, which had its best year ever.Location-based-games-revenue-in-2019

Another title from Chinese publishing giant, Tencent, PUBG Mobile shot up the charts in 2019 to hit No. 2 in the rankings with just under $1.5 billion as well. The battle royale game grossed close to $1.3 billion more than in 2018 thanks to its re-launch in China, where it's now known as Game For Peace.

Of the top 30 games, 11 of these titles increased revenue by more than $100 million in 2019. For some, this was due to a launching late in 2018, but for others, 2019 was a year for high growth through a combination of user acquisition and new features.

2019 Mobile Game Revenue

But a key takeaway from 2019 is that, with 22 different publishers in the top 30 and revenue increasing outside the top ten, the market is growing for everyone.


Other Stories From January

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Epic Games Store Has Generated $680m So Far, With Exclusives Being 'critical,' Says Tim Sweeney

 

 

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Chinese game giant NetEase is carving itself out a piece of the digital distribution market, with the launch of its own platform Fever Game

 

 

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Demonstrating Cloud Gaming Concurrency at Scale with Polystream and AWS Game Tech

 

 

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The Metaverse: What It Is, Where to Find it, Who Will Build It, and Fortnite

 

 

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Origami is a new game engine being built by Vital Reality, a group based in Los Angeles