5G will drive a cloud gaming explosion, analyst says

5G networks coming online along with new streaming video game services will cause an explosion in cloud gaming over the next few years.

According to ABI Research, the growth will come from both existing and new gamers attracted to paying subscription fees instead of high hardware costs, more device flexibility and potentially better graphics quality. By 2024, there will be more than 42 million active cloud gaming users and overall market revenue could reach $4.5 billion.

But the firm said despite a 61.7% compound annual growth rate from 2018 to 2024, the cloud gaming market will still represent a relatively small segment of the overall gaming landscape through this forecasting window.

“Google Stadia has brought a great deal of attention to cloud gaming, but the market has a deeper history and already has a growing list of companies operating in the space, serving both consumers and business customers, including telcos and pay TV operators,” said Michael Inouye, principal analyst at ABI Research, in a statement. “While technical and behavioral aspects of the market are in a much better place today, the greatest competitive hurdle remains the incumbent gaming platforms, which will lead to a more protracted transition to the cloud.”

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Inouye said the transition from physical to digital media within the gaming market has happened at a relatively rapid pace, but there are still many business and content considerations that need to be worked out before the cloud becomes the primary gaming platform of gamers across the world.

Google is planning to launch its new video game streaming service, Stadia, on Nov. 19. The service will be priced at $9.99 per month, and will work on TVs connected to a Chromecast streaming device along with laptops, desktops, Pixel 3 and Pixel 3a.

Earlier this year, Sony and Microsoft – famous competitors in the video game console market – announced plans to work together on technologies based on Microsoft Azure that can help improve their respective cloud gaming services.