Mobile gaming and cloud gaming platforms are now vital contributors to the video game industry’s expansion. According to recent data, the cloud gaming market rose from an estimated $45 million in 2017 to $66 million in 2018. If this trend continues, that figure is predicted to skyrocket to $450 million by 2023.
As major players like Apple, Google, and Microsoft flood the cloud gaming space with new offerings, lesser-known platforms have also begun to garner attention in a show of industry momentum. For instance, Nvidia GeForce Now and PlayStation Now are two of several options offering cloud gaming functionality. But what exactly is cloud gaming, and why is it on the rise? To answer this question, it’s important to break down the basics of the underlying infrastructure.
What is cloud gaming?
Cloud gaming refers to the practice of playing video games using remote hardware — typically, servers owned and operated by another company. Rather than download a game or use physical media to play on a console, cloud gaming employs Internet streaming to deliver games to player devices. As a result, mobile phones, TVs, and computers do not rely on internal hardware to power games and data is stored remotely.
As such, cloud gaming is an effective mechanism for achieving interoperability between devices. However, some highlight the requirement of a persistent Internet connection as a potential hurdle to broad adoption. While highly developed nations like Japan seamlessly lead the charge, lesser-developed countries, such as those in Africa, lack the infrastructure to make it a reality.
Device cost and interoperability
Perhaps the most prominent benefit of cloud gaming is that a computer, TV, or mobile device can deliver games without relying on local hardware. Further, because game data is stored in the cloud rather than on a physical device, players don’t need to worry about lost progress.
This dynamic ensures games remain compatible with any device, and expensive hardware upgrades remain the responsibility of those operating the cloud network. In the case of developing economies, such as those throughout Africa, this functionality enables users to access the latest games without concerning themselves with cost-inhibitive hardware and physical media purchases.
Cloud gaming in emerging economies
According to recent figures, the number of mobile phone users around the world hit 4.9 billion in 2018. However, many of these users already reside in nations with robust internet infrastructure. In developing countries that lack widespread broadband, mobile phone use has become crucial to “leapfrogging” development hurdles.
By enabling unparalleled interoperability, cloud gaming has the potential to improve inclusion throughout mobile-dependent nations. Highlighting this dependence, figures from GSMA Intelligence suggest sub-Saharan Africa saw the second-fastest growth in mobile adoption. However, mobile network speeds remain a hurdle to delivering consistent cloud gaming services across these developing regions.
Reflecting this reality, the data center footprint of prominent infrastructure vendors like Amazon Web Services, Microsoft Azure, and Google Cloud remains sparse in regions across South America and sub-Saharan Africa.
Despite the current reality, data suggests that top-line annual cloud services revenue in Africa is expected to double between 2019 and 2023. Further, public cloud services revenue is set to triple in that time. Although barriers to broad deployment remain, the upside is considerable, especially as 5G begins its ascent.
The impact of 5G networks
The increasing prominence of high-speed Internet around the globe is one of the primary factors driving the market growth for cloud gaming. As mentioned, cloud gaming relies on constant Internet streaming, and 5G enables a superior user experience. However, at least for now, device compatibility is likely to restrain the market’s growth.
In reality, 5G services remain limited, with the first true 5G enabled phones hitting the market over the past year. Further, market penetration is unlikely to occur before 2023 or 2024. In the interim, many platforms have only begun to aggregate game libraries, even if users end up downloading them onto their devices rather than streaming them.
In developing nations, the transition to 5G technology is likely to take even longer, and sub-Saharan Africans share in this belief. In a recent survey, GSMA found that 67% of respondents believe 5G will arrive after 2025, considerably later than forecasts in developed markets.
At least for the time being, there’s little incentive for most console or PC gamers to make a significant switch to cloud gaming in developed regions. And in lesser-developed economies, this transition is even less likely to occur before the latter half of the decade.
How these trends affect blockchain
As advancements in 5G accelerate, integrations with Blockchain 5.0, or the current generation of blockchain technology, appear imminent. With 5G set to bolster device interconnectivity, Blockchain 5.0 uses such as payment and money transfers, digital contracts, distributed cloud storage, and digital identity confirmation are a few potential use cases.
All of these applications of Blockchain 5.0 will impact the growth of the gaming industry over the next year. As users in developed countries adopt 5G for gaming purposes, simultaneously validating digital identity and maintaining anonymity will be critical. Striking the right balance remains a challenge, but Blockchain 5.0 relies on more agile infrastructure, improving the efficiency of privacy-preserving mechanisms.
Cloud gaming in 2020 and beyond
Between Microsoft’s Project xCloud and Google Stadia, the biggest tech giants appear all-in on cloud gaming. However, these software and service companies are also betting on an imminent switch to 5G network speeds. These speeds will be crucial to power the high-quality experience gamers will demand before powering off their consoles and PCs for good.
When 5G achieves global penetration, especially in developing nations, cloud gaming will revolutionize the industry while serving as an economic catalyst. In Africa, the late introduction of 5G technology will allow nations to circumvent the centralized networks of today. These late 5G iterations will provide an opportunity to develop decentralized systems outside the influence of governments and corporations. This network architecture will eliminate many of the conflicts we observe today, such as the market dominance showdown between Huawei (China) and the U.S. — neither of which leave much room for emerging economies.
Cloud gaming and other decentralized technologies represent the decoupling of IoT and national interests, a crucial component of keeping the peace as tech advancements accelerate. Looking at gaming itself, players are likely to embrace monthly subscription fees to play cloud-based games on any device, from anywhere. In developing nations, cloud gaming will leverage the already high rates of mobile device usage. And although it’s unclear how quickly we’ll achieve global inclusivity, it’s apparent that 2020 will be the starting line.
Chris Cleverly is CEO of Kamari, a blockchain project looking to build an ecosystem of mobile gaming and payments for one billion people across Africa.