What is Cloud Gaming & Why Should You Care

I have been talking a lot about the gaming industry recently in this space for a variety of reasons. For starters, I think it’s a super fascinating market that I didn’t expect to be so huge five years ago. But also, there’s an emerging gaming hub sprouting up in Columbus Ohio that has caught my attention. And although I don’t think Columbus is going to be the Silicon Valley of Game Development (not sure that analogy tracks, but you get the point), I do think it’s fascinating that a mid-level college town like Columbus can have so much interesting things going on in the gaming / esports space.

But we shouldn’t be too surprised by the gaming industry’s penetration into the Columbus market - gaming’s decentralized and technologically accessible nature has been a big piece of why it’s caught on like wildfire in the past 5-10 years. As recently pointed out by Matthew Ball in his great long form piece about gaming taking over the world, unlike other industries, when there are technological advances, the incumbents of the gaming space adapt and grow effectively. Technology is a key component of video games, so there is very little use in resisting change and being a gaming Luddite. This mean’s that one of the key advantages of the internet - being connected with people across the globe, has been most effectively taken advantage of by the video game industry. You don’t have to live in a specific time or place to be really good at something (in order to be a great classical composer in the 1700’s, you had to live in Vienna, etc). You don’t have to be in a physical scene in order to succeed - the scene is all online, the way a lot of early internet prognosticators thought everything would be back in the day.

But this has led to the rise of cloud gaming (or at least, the start of the rise of cloud gaming). What makes the video game industry particular compelling, for me at least, is the idea that technology is inevitable and no one is really even trying to prevent it from happening. That’s because technology is what has inherently enabled all of gaming to occur. There could be no XBox Series X, with out its predecessors, all of which are technological advancements themselves. The video game industry has not forgotten its roots, and as a result, continues to march forward. So with the rise of the cloud in all things, it appears that the gaming world is going to capitalize on the newest advancement.

So what is cloud gaming? Well, if you don’t know what the cloud is (and there is no shame in that), let’s start there. The cloud refers to software and services that run on the Internet, instead of locally on your computer. In other words, the system is run on somebody else’s server, not your own. There are a lot of implications of why the Cloud is so important, but you potentially already know them if you have come this far. But how does cloud gaming work? Well, it’s basically the same concept, but replace software with video games (most video games are software, at this point anyway). Think of cloud gaming as the Netflix of video games - you don’t physically insert the DVD into your television set anymore - you are getting those streaming films off of the internet, hosted by Netflix.

There are three types of cloud gaming - peer-to-peer gaming, game streaming, and progressive downloading. Most of the time, when we are talking about cloud gaming, we are just going to be discussing game streaming, so it’s safe in this context to use them relatively interchangeably. What is important to note is that game streaming relies upon the actual game being stored somewhere other than where it is being played, which means that the processing power of the computer or device being used to game is less relevant than that of the servers where it is being stored and the internet connection that is streaming it. As a result, it is super-important that the participant in cloud gaming has really strong internet connection and the host has really strong technical infrastructure. Massive data centers are required to keep up with any of the cloud gaming services that are in place today. Up until the past couple of years, technology had not advanced to the point of being able to both (a) have strong enough internet connections in every home and (b) have sophisticated enough back-end infrastructure to support hosting the games.

For the most part, cloud gaming has been something that was shown off at E3, game developers conferences, and other industry showrooms. There have been some recent attempts to make cloud gaming a success, but for the most part, they have yet to gain significant traction. Gamers are still very attached to their consoles and personal gaming rigs. Latency, limited titles, lesser graphics and a host of other issues have prevented a large population to move from console to cloud.

Recently, however, there have been several cloud gaming resources that have launched or announced their launches. The first major cloud gaming service was OnLive, which required a “microconsole” and was eventually purchased for its patents in 2010 by Sony. OnLive’s gaming experience just didn’t live up to its competitors even though it had similar titles, and as a result of latency and poorer gameplay, it did not survive very long.

The most recent major launch of a cloud gaming platform was Stadia, by Google, which went live in November 2019. Stadia has so far had a solid response from critics and can render and reduce latency better than any of its cloud gaming predecessors. While it’s difficult to describe it as a complete success yet, it has been one of the biggest steps forward for cloud gaming in a while. Stadia just requires Google Chrome capabilities and a good internet connection (and a special controller). Stadia supports gameplay at 4K at 60 fps and future plans for scaling to 8K at 120 fps, fairly impressive stats (I think). While we don’t know how many people have signed up for Stadia yet, it is a step in the right direction if you are excited about the possibilities of Cloud Gaming.

There are other services beyond Google’s platform that have recently been announced, including Project Atlas, xCloud, Playstation Now, and several others. The race to launch a cloud gaming service is on, and it appears as though consumers are going to benefit from this boon handsomely. Most of these services have announced $10 - $30 per month subscription fees attached with them, and very little console upfront costs required (a premium Stadia package included $110 of upfront costs). This price point is big because this is a big opportunity for the gaming community to expand past its diehard fans. Although some would say gaming has already gone fully mainstream (its market size is already larger than music and film industries combined), it’s important to note that there is plenty of room for continued growth. Reducing the cost to access gaming could be a huge boon for interest in the activity and could lead to an improved ecosystem.

If cloud gaming can figure out how to have a relatively unencumbered experienced compared with traditional gaming (low latency, high resolution, etc), then you can expect the industry to continue thrive as it could act as a gateway for less serious gamers. While I don’t think that any of the extremely serious gamers of today are going to just give up their extremely high-quality equipment just to save some money, I do think that cloud gaming opens up the door for a less-advanced, less dedicated gamer to participate, making gaming fully mainstream. And as gaming continues to go deeper and deeper online and becomes more social, the online aspects of the game will only continue to expand in scope.

I also think one other benefit of cloud gaming is access for more game developers to share their works with the world. Like with most streaming booms, streaming video games will allow independent development teams who normally couldn’t get recognition to go out there and get the recognition they deserver. There are already “viral” video games coming from independent teams, but I think cloud gaming is only going to increase this type of phenomenon. Also, if you are looking for further evidence of cloud gaming’s appeal for developers, look no further than Roblox. While this isn’t a perfect example of cloud gaming, it’s a massively growing, online platform that have gained insane traction over the past several months. It is self-described as a game-creation system - meaning something you create other games on. If you want to know what the future of gaming looks like, check it out.

I don’t know exactly when cloud gaming is going to take off but it does appear that 2020 is going to be a huge year for this kind of service. There’s a part of me that likes to think that all game consoles will go the way of the dinosaur by 2021, but that’s just extremely unlikely. Like most services, I think this is going to come out of the gate hot, cool off while the market reacts and readjusts (there might be some casualties), and then be on top for a long time. Or at least until the next better way to game comes around.