Report by ABI Research and InterDigital confirms cloud gaming providers should favor subscription-based pricing models to take advantage of market potential
A new report from ABI Research has found almost half of the expected population in 2024 will be gamers. To take advantage of this huge market potential, telecommunications companies, internet service providers (ISPs), and original equipment manufacturers (OEMs) must evaluate different business models to determine whether the service will succeed or fail.
Commissioned by InterDigital, the report “Cloud gaming: Enabling a next generation gaming and streaming paradigm” states that the video gaming market is now among the largest entertainment industries in the world. Currently, more than 2.3 billion individuals play video games, and the number of gamers is expected to grow substantially over the next four years to more than 3.5 billion gamers by 2024. The Asia-Pacific region represents the largest gaming base with 51% of the worldwide total. The Americas, at roughly 20% of the player base, represent the second largest revenue opportunity.
The report suggests that for cloud gaming operators to capitalize on this growing industry, they must evaluate their business models while the market is in the early stages of its life cycle. Over-the top media services, like online video streaming, offer the most pragmatic and consumer-friendly option thanks to monthly, quarterly, or annual subscription plans. Consumers favor unlimited subscription plans over time-based payment plans, even if they end up paying more than what they would on a usage payment plan.
Subscription models are also intended to shape user behavior. A parallel can be drawn with mobile data, where caps were implemented to increase revenue, but also to dictate usage. While usage-based fees are less popular, they could prove to be the optimal strategy for market players in early cloud gaming days, especially when it might be challenging to convert the core gaming audience from gaming PCs and consoles.
Furthermore, the future of cloud gaming doesn’t solely lie in traditional video games. According to the report, there are increasing opportunities for market players to add gaming elements to non-gaming activities and content. Gamification can increase flexibility in delivery and consumption, opening new use cases and applications, such as within workplace collaboration tools and fitness applications. Augmented Reality (AR) and Virtual Reality (VR) also have inherent synergy with gaming and, more specifically, with cloud gaming.
“The cloud gaming market is rapidly growing, and it’s clear those who act now will capitalize on this opportunity. But these players need to act fast if they want to take advantage of everything this exciting market has to offer,” said Laurent Depersin, R&I Senior Lab Director at InterDigital. “As developments in 5G and Wi-Fi penetrate the mainstream, enabling more products and services to become gamified, we’ll see Gaming-as-a-Service (GaaS) really come to life—pulling in new gamers, and encouraging existing ones to make the transition to the cloud, thanks to its user friendly business model. For cloud gaming and GaaS to succeed, players need to ensure they deliver both the right business model and the right user experience to drive mainstream adoption.”
To access the full report ‘Cloud gaming: Enabling a next generation gaming and streaming paradigm’ please click here.
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