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Amazon, Amazon Prime, AMD, Android, China, CloudGaming, Gaikai, Games, gaming on demand, GRID, IPad, Kindle Fire, Kindle Fire HD, LG Smart TVs, nVidia, PC gaming, PlayStation, PS4, smarttv, Sony, SquareEnix, Steam
4. PC sales might be on the decline, but its full Steam ahead into cloud gaming, with Amazon – not Apple – primed for launch of a fully fledged ‘games on demand’ service.
Tablet sales might be hurting PC sales right now [9], with overall Android, Windows and iOS shipments estimated to hit a whopping 190m units in 2013 [6], but the inherent openness of the PC as a platform continues to make it an invaluable and often profitable proving ground for products and services such as Steam, social games and ‘cloud’ gaming.
Some excellent mods and highly addictive Facebook games have successfully snared hard core gamers and laptop grabbing grannies alike, who happily spend hours (and dollars) playing DayZ, World of Tanks, Words with Friends, Candycrush, Farmville etc. – all of which have helped the humble PC enjoy something of a renaissance as a gaming platform [7]. Despite the emerging ‘threat’ from tablets, the global PC gaming market was worth around $20 billion last year, up an impressive 8% on 2011. Predictably, around a third of that growth came as a result of an increased interest in PC gaming in China [8], which along with strong growth in Brazil, Russia and India, helped push the total number of PC gamers worldwide to over 1 billion – an impressive install base for cash rich technology companies looking to invest in the next ‘must have’ online products and services.
PC gaming is on the up, but specifically it is ‘cloud’ gaming that is pulling in the most investment and interest. Experts estimate that the streaming games market will grow nine-fold by 2017, reaching $8 billion. So which companies are best positioned to capitalize on this growing trend for gaming on demand and who will be first to offer its customers a muti-platform, mass-market ‘pay and play’ proposition?
Sony’s acquisition of Gaikai [2] for an astounding $380 million was at the time regarded as a bold move by the company desperate to get one over on arch-rival Microsoft, but the current Gaikai service, which allows PC gamers to stream over 200 high quality games directly to their PCs is growing by the day and currently boasts over 50m gamers a month. PC gaming is clearly alive and well and it’s no surprise that pioneering technology firms regard it is as a valuable and in many respects profitable proving ground to test and refine new technologies and services, but it’s the potential of ‘gaming on demand’ on other platforms, specifically tablets and smart TVs, that is really getting the cloud power players excited.
It’s early days, but consumer electronics giant LG recently rolled out Ubitus’ Cloud Gaming service to Smart TVs [3] in the US. The service, which is currently in Beta, allows users to stream a strong mix of console grade titles such as Dead Rising 2 and Devil May Cry 4 directly to their ‘internet enabled’ TV set and includes free ‘try before you buy’ trials and support for a numerous gamepads. So far there are no numbers to substantiate how the service is performing, but both companies are confident that they will launch a fully-fledged service later in the year.
Last year we saw AMD enter the fray with the announcement of a hefty investment in CiiNow, whilst SquareEnix announced its CoreOnline cloud gaming service. Chip manufacturer nVidia is reportedly touting it’s fancy new GRID technology to mobile operators and has already signed up half a dozen cloud gaming companies, including PlayCast Media to bring cloud gaming to smart TVs. With almost every cable and broadband provider clamoring to differentiate their products and services, there is an increasing sense of momentum building, with many predicting that next year we will see cloud gaming go mass-market across PC, tablet and smart TVs. Sony has already confirmed that it will offer a streaming ‘games on demand’ service featuring original PlayStation and PS2 games on its new PS4 console via Gaikai in 2014 and you can bet that Microsoft won’t be far behind, but surprisingly it’s Amazon who might be first to make a move to dominate the ‘play on demand’ space.
The online retailer has made huge strides into the ‘on demand’ space with movies through various acquisitions and like Google, the firm continues to invest heavily in expensive cloud technologies [12]. With sales of the Kindle Fire and Fire HD anticipated to top 15m units in 2013, Amazon is quickly building a large, loyal and billable user base that will have Apple looking over its shoulder as iPad market share continues to slide (in 2010 it was 87%) [5] and Android powered tablets start to proliferate, especially in emerging markets where the premium priced iPad is just too expensive.
Amazon has an aggressive and ambitious digital distribution strategy and has recently extended its Android App distribution network to over 200 countries, including Brazil, India, South Korea etc. whilst its online retail business now boasts over 182 million ‘active’ customers, including around 10 million customers who have signed up to its highly profitable ‘Prime’ service for $79 a year, which incidentally includes ‘free’ membership to the firm’s Netflix-like video on demand service [10]. The firm’s R&D department is no stranger to developing connected gaming products and services; the company’s ‘Advanced Game Technology’ team were responsible for creating the Amazon Appstore’s ‘Test Drive’ feature which allows users to effectively ‘try before they buy’ selected Android apps within a browser – which is essentially a cloud based trial service; technology that has very obvious applications with PC games. But it’s the handful of recent job listings that might point to increasing momentum in terms of the firm’s ambitions in the gaming space, along with various statements from the Advanced Gaming Technology team’s LinkedIn pages [11] that suggest a global ‘games on demand’ cloud gaming solution for its millions of PC and tablet customers is just months away.
[3] http://www.engadget.com/2013/06/11/lg-brings-ubitus-gamenow-cloud-gaming-to-smart-tvs-in-the-us/
[4] http://www.bigfishgames.com/daily/cloud-gaming/
[5] http://mashable.com/2013/01/02/tablet-predictions-2013/
[6] http://www.datamation.com/mobile-wireless/idc-tablet-market-to-reach-190m-units-in-2013.html
[8] http://pcgamingalliance.org/press/entry/pc-gaming-alliance-releases-two-member-exclusive-reports
[9] http://bgr.com/2013/05/28/pc-sales-projection-2013/
[10] http://www.businessinsider.com/amazon-prime-10-million-members-morningstar-2013-3
[12] http://www.zdnet.com/blog/btl/amazon-google-in-investment-mode-building-clouds-isnt-cheap/37123
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