Niko Partners’ newly published 2019 Cloud Gaming in Asia Report indicates that cloud gaming revenue in Asia is set to soar from $270 million in 2019 to $3 billion in 2023. The number of cloud game players is set to also soar, from 3 million in 2019 to 60 million in 2023, with the potential to pass a whopping 500 million people by 2028. Cloud gaming isn’t a new concept and has been around for over a decade, but the advent of 5G gives cloud gaming a whole new platform and perspective. The conditions are right for cloud gaming to succeed in Asia, and an outcome will be that it removes barriers for gaming that exist for many people today.
Cloud gaming will become an alternative way for players to consume games, removing the need for players to have the latest hardware, or repeatedly upgrade the existing hardware they have. The biggest near-term opportunity for cloud gaming is to access smartphone gamers, who comprise the largest share of the Asia gaming audience, and who would be able to play PC, console and high-end mobile games via the cloud on their mobile device. Infrastructure and business models will be key to cloud gaming’s success, and this is why we see 5G and free to play (F2P) cloud gaming platforms as key drivers of growth.
Japan is currently the largest market in Asia for “cloud gaming 1.0”, which is PC and console cloud gaming services, such as PlayStation Now and Yahoo Game Plus!. By 2023, we predict that China will be the largest cloud game market particularly for “cloud gaming 2.0”, driven by free to play and time-based fee cloud gaming services running over 5G networks on smartphones. Chinese tech firms are already investing heavily in 5G, cloud computing and cloud gaming with Tencent, Alibaba and Huawei all involved in the space. The most successful cloud gaming services in Asia will be operated by companies, such as Tencent, who own multiple parts of the ecosystem: the platform, games library and computing back end.
China’s government also wants to encourage game companies to focus on 5G and cloud-based games with Guo Yiqiang, the director of the Publications Bureau under the Central Propaganda department, asking companies to actively explore and closely monitor both areas. Cloud gaming 2.0 is still in its testing phase in China, and we tried out a couple of services from Tencent and Shunwang earlier this year at ChinaJoy, with both showing promise. We expect Chinese cloud gaming 2.0 services to launch later this year once 5G starts to roll out across the country, we also expect these services to launch overseas.
Cloud gaming 2.0 is currently in its infancy and whilst we expect to see strong growth over the next few years, we note that the majority of gamers will still play games the way they do today, which is to say that cloud gaming will be a niche play for awhile. That being said, we do expect cloud gaming 2.0 to reach the mass market once 5G is nationwide, F2P cloud gaming platforms become profitable, games are developed with cloud in mind and if gamers turn out to be satisfied with latency performance of cloud games.
We believe that the service itself will be the killer app for many players, being able to play any game, anytime, anywhere.
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