Why game publishers cannot afford to miss the cloud gaming opportunity

Why game publishers cannot afford to miss the cloud gaming opportunity

Now that faster internet connections have become commonplace and the connectivity is not an obstacle any longer, most tier-one game publishers (EA, Ubisoft, Capcom, Take-Two…) have enthusiastically jumped on the cloud gaming technology, following the steps of the well-known projects of Sony, Microsoft and Google.

Benefits for users are clear: 53% of Steam users do not meet the minimum hardware requirements to play the latest AAA games from top publishers. Cloud gaming’s technology makes top quality videogames accessible to everyone but…  what are the advantages for both publishers and developers?

1. An expanded market.

Cloud gaming lowers significantly the entry barriers to games multiplying the market reach. EA´s CEO Andrew Wilson has acknowledged that there´s a 100 million people gap between the HD gamers they do have and the people who are actually playing games in other, lower spec, devices. “For what is essentially the same investment in the creation of the content, we might entertain an additional 100 million players”.

2. One format-fits-them-all

Videogames are difficult and expensive to develop because of the different hardware combinations that demand additional development and testing resources. With game streaming, however, developers only work with a unified platform.

3. New games and new game behavior insights

Developers are figuring out new games that take advantage of the cloud gaming architecture in order to deliver experiences that can´t be achieved by the existing technology. Relying on a network of servers dedicated to complex tasks, the developer gets more power, agility and scalability and may focus on gamer interaction, immersion and personalization. Cloud gaming helps to identify better the players´ behaviors and analyze their gameplay patterns in order to optimize user experience and raise revenue.

4. No piracy

If games run on remote servers instead of on your own computer, they’ll be almost impossible to pirate. This makes cloud gaming an attractive form of DRM to publishers.
Publishers have acknowledged these benefits and, while the support to cloud gaming technology is clear and explicit, some have confessed to having doubts about the subscription business models that often go paired with it.

There´s no denying that entertainment is shifting towards subscription. In the US, Superdata has noted that 74% of people who spend on digital video do it through services like Netflix and Hulu.
Publishers are wrong, however, when they assume that this subscription trend will have a negative impact in their bottom line. The reasons are the following:

1. Word-of-mouth advertising
As Microsoft´s Head of Xbox has recently declared, putting games on subscription actually increases sales of the individual game because it functions as word-of-mouth advertising for the game.

2. Higher spend per user
Superdata has noted that, on average, subscribers to game services spend $25 a month on in-game content, compared to $10 for non-subscribers. And even with the subscriptions, those users are spending $57 a month on full game purchases, compared to the non-subscriber average of $39.

Subscription models are definitively profitable but they´re just a possibility out of many others: Rental, Pay-as-you-go or monetizing in streaming through engagement and microtransactions, which is what most of the game industry is doing now anyway.

PlayGiga´s technology can help you multiply the market reach of your games. Get in contact with us asap to learn more about our cloud gaming solution for publishers.