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Cloud Gaming Revenues Predicted To Top $400m In 2014

Cloud gaming OnLiveAccording to a new report by Screen Digest supplied to GamesIndustry.biz, cloud gaming from services such as OnLive and Gaikai could potentially generate revenues of around $411 million in 2012.

However the report warns that companies offering on-demand games services may struggle gain market share in the short to mid-term, as they grapple to differentiate themselves from already established distribution channels and audiences already technologically equipped to play the latest releases.

“Crucially, many gamers, particularly in mature Western markets such as the US, the UK, France and Germany, who are interested in the biggest games from the best-known PC and console game publishers already have the latest equipment capable of playing these titles,” said the report.

“Not until customers are asked to spend significant sums to upgrade to the next generation of consoles in the 2013-2014 timeframe will the value proposition of consumer-focused video-streamed games-on-demand services really come into effect. The big question is: Can existing services survive until that window?”

The report goes on to compare current distribution methods to emerging game streaming servies, noting that homogeneous pricing may cause a major hurdle and consumers are unlikely to see a significant benefit in regards to price for them to switch from boxed or digital downloads to cloud gaming.

“On a standalone basis, it looks as though video-streaming games-on-demand services will have a tough time initially,” said Ed Barton, the report’s author.

“Key to their future potential will be territorial expansion and broadening the target platforms away from the PC into connected TVs, set top boxes, mobile platforms and possibly games consoles.”

The report estimates that in North America, cloud gaming will generate revenues of $332 million in 2014 and $79 million in 2014 for UK, Belgium and German markets.

Despite the reports optimistic conclusions, there are still numerous obstacles cloud gaming and internet infrastructure must overcome in a short time before 2014. Many gamers regularly experience lag while playing network first person shooters (FPS), and it is unlikely that this will improve with the addition of streaming HD video and sound at the same time.

The other concern many will have is what kind of games portfolio will be available? Will the target games be shooters and high-end graphics, or will they include a shift for casual games as well – although, it seems unlikely that consumers would purchase casual games on this platform unless there is a change in the elevated pricing.

As the report highlighted earlier, if there is not a significant price to benefit ration, it’s unlikely that this distribution model will achieve the proposed figures…yet.

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Source via GamesIndustry

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