The Rise and Reign of Cloud Gaming

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            Streaming video is content sent in compressed form over the Internet and displayed by the viewer in real time. While Internet video in general is growing rapidly, live streaming specifically is growing even more. Here are some statistics on both live streaming and Internet video as a whole:

You might be wondering what drives this growth in live streaming. One contributing trend is the rise of virtual MVPDs like Sling TV. Since its inception in 2015, Sling TV has drawn in nearly 9 million viewers. However, the major players here are traditional sports and eSports. Traditional sports are often live streamed these days, and the Super Bowl this year set a record for the number of online viewers.

            Like traditional sports, people are increasingly consuming more eSports as well, and it is truly a game changer. To be clear, eSports is a form of competition using video games. Consumers can either enter online gaming tournaments themselves or watch other players (often professional players) play their favorite games.

Newzoo forecasts that the global audience of eSports will grow to 645 million viewers by 2022.

            The proliferation of eSports has people outside of the gaming industry paying attention too. Owners of traditional sports teams, such as the New York Mets and the L.A. Lakers, have invested in professional gaming. Additionally, the eSports organization Complexity (partially owned by the owner of the Dallas Cowboys) has created a training facility for gamers. There, they have the same access to professional care that the football players have.

            Microsoft, Google, and several others are fighting to be the ultimate cloud gaming offering, the Netflix of Video Games, if you will. Microsoft’s upcoming Project xCloud and Google’s Stadia have a lot of hype around them after they were introduced at the E3 video game conference in L.A. earlier this year.

You may be wondering what benefits cloud gaming has over traditional video games. For one, there are tremendous cost savings; the expensive, complex hardware required to play modern video games is stored in a data center, where only the raw video footage is streamed to the players’ screens. Data centers are efficient at powering and cooling their consoles, and they can keep machines in use 24/7. Additionally, by moving the console to the cloud, games can be played on essentially any screen, whether it is a TV with a streaming stick or a mobile phone.

While the data center switch is a huge pull for cloud gaming, the payouts are probably the biggest factor captivating gamers.

Kyle “Bugha” Giersdorf, 16, recently won $3 million playing in a Fortnite championship. Despite not being a traditional physical athlete, as an eSports athlete, Giersdorf trains for 6 hours a day on Fortnite. Fornite is one of the biggest paying games out there; since February 2018, Fortnite tournaments have awarded $71.5 million in prize money. 10 Fortnite players have made at least $1 million each from the game. 95 players have made at least $100,000 each. Amazingly, two games have paid out more than Fortnite: Defense of the Ancients (DOTA) 2 and Counter-Strike: Global Offensive have awarded $181 million and $80 million respectively.

Overall eSports Stats for 2019:

  • Total Prize Money: $111,708,994.06
    • Total Tournaments: 25,721
    • Total active players: 16,000
    • Mean Tournament prize pool: $43,433
    • Mean earnings per player: $6,982
    • Median tournament prize pool: $1,317
    • Median earnings per player: $682.29

            As mentioned above, you can stream games on basically any device with a screen, but they are not created equally. The top 3 devices for gaming this year are the PC (66% of game developers are currently developing for the PC, and 60% are more interested in PC development than any other gaming device); the Nintendo Switch (45% are developing and 18% are most interested in the Switch); and the PlayStation 4. At the very bottom of the list is Apple’s Mac, with only 14% of game developers currently developing for the Mac.

            While it isn’t a gaming platform, this article would be incomplete without a heavy mention of Twitch. Twitch, which is owned by Amazon, is a service where gamers can broadcast their gameplay for others to watch. They also offer music streaming and other creative content, but gaming is the key element to the platform. You can watch gamers live or on demand.

This year, Twitch captured more than 70% of all live gaming hours watched compared to its rivals, who made up the other 30%.

            Twitch is a community-driven platform. It’s important to understand this from a business perspective because Twitch users’ sense of community lends them to being great customers. In the last month, 58% of Twitch users have posted a review of a product, company, or service, which is 1.4 times the global average. Furthermore, 45% of Twitch users say they would buy a product or service simply for the experience of being part of the community built around it. Advertising on Twitch reaches a demographic that otherwise largely ignores most advertising.

What’s most fascinating about Twitch and eSports—what really sets them apart from traditional video games and traditional sports—is the clear marketing element.

Twitch shares significant revenue with the popular players that use the platform and it has sought to utilize its influential creator community to drive electronic game sales. Esports use high-octane competitions to convince people to download specific games and try them for themselves. This is necessary because if the scene around a game dies, so does that particular eSport.

Ultimately, latency is the biggest concern with this type of online gaming.

Missing even a frame or two could cost you a game, so these services must be flawless. Microsoft and Google think they have what it takes to beat this latency challenge, as they already own enormous cloud businesses and a multitude of data centers.

            As consumers spend more time on these platforms competing for money, network demands will increase and so will customer expectations for quality. In 2022, Internet users will consume 282 Exabytes per month watching video globally, and North America will generate about a quarter of that traffic. These are your customers. Is your network prepared to handle their streaming habits? Get in touch with us today at hello@roninpbr.com.

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