Forget the annual console upgrade cycle. A new analysis from Bloomberg Intelligence projects the cloud gaming market could reach a staggering $38 billion by 2035, signaling a potential decline for traditional game consoles in the mass market.
Artificial Intelligence is Changing the Game
Modern games are becoming increasingly complex, largely due to advancements in artificial intelligence (AI). This, in turn, raises hardware requirements. The Bloomberg Intelligence report predicts that cloud gaming will emerge as the more efficient solution to meet these demands.
Instead of purchasing new consoles every few years, players will be able to enjoy high-performance games streamed directly from powerful servers in data centers. The gameplay will be transmitted over the internet, providing access to the latest gaming experiences without the need for constant hardware upgrades.
Who Wins in the Cloud Gaming Revolution?
Nintendo, which currently has limited engagement in cloud gaming, may face challenges adapting to this new landscape. Its strategy prioritizing traditional consoles could become less relevant.
Sony, with its PlayStation Plus service and the PlayStation Portal remote play device, is in a significantly stronger position. Its mature ecosystem and infrastructure for cloud services give the company a distinct advantage.
Microsoft, Nvidia, and Tencent are also poised to be major beneficiaries of this transformation, with existing investments in cloud infrastructure already paying dividends.
- Microsoft Xbox Cloud Gaming is projected to hold approximately 40% of the cloud gaming market. In the third quarter alone, players spent around 220 million hours on Xbox Cloud Gaming.
- Nvidia possesses a technological edge thanks to its GeForce NOW service and high demand for its GPUs.
- Tencent is considered a leader in the Chinese cloud gaming market due to its advanced technological foundation.
Decreasing Costs of Computing Power
Nathan Naidu, the Bloomberg Intelligence analyst behind the report, notes that the current surge in demand for AI data center services has led to increased computing power costs. However, the construction of numerous new data centers is expected by the end of the 2020s. This will lead to an oversupply of GPUs.
This increase in excess capacity will fuel competition and drive down prices. Consequently, cloud gaming operators will be able to improve their operational efficiency and reduce costs.
Game Consoles: For Enthusiasts and Collectors
According to Naidu, gaming hardware is gradually transforming into a niche product for dedicated enthusiasts. For hardcore gamers seeking maximum performance, consoles will likely remain relevant. They may become akin to record players – devices for collectors and audiophiles.
Game consoles are ceasing to be the primary gateway into the world of video games, becoming one of many available options. And, frankly, a rather unfavorable option in terms of cost-to-performance ratio.
Thus, the future of video games is likely to be shaped by cloud technologies and artificial intelligence, opening new horizons for gamers and altering the landscape of the entire industry.
