Will Cloud Gaming Ever Take Off?

With the gaming industry now worth more than the film and music industries combined, the major players are, unsurprisingly, looking to build on this growth. Inspired by the success of streaming platforms like Netflix, game developers have begun to explore a similar model by bringing games to the cloud. Thus far, the potential of so-called “cloud gaming” has fallen short due to persistent issues with bandwidth and playability; however, developers remain optimistic that cloud gaming is the future of the industry.

In this article, we look at the current state of cloud gaming, including the current offerings, common issues, and future potential.

The promise of cloud gaming ...

As the New York Times explains, cloud gaming promises a seamless, integrated gaming experience liberated from the traditional confines of a specific console or computer: “...with new streaming services you have the freedom to take your games from one device to another without losing your progress, installing software, or buying multiple copies, and you can enjoy visuals and performance that aren’t limited by the device you play your games on. In theory, cloud gaming offers a way for you to pick up your games from anywhere on the planet, on any device you own, with virtually no downtime in between.”

The major promises of cloud gaming include:

• The ability “to stream games on demand from a remote server,” as one does with a typical content streaming service.
• Eliminating the need for game installation and hardware requirements.
• The option to play games “across different devices and resume your progress, which is saved in the cloud.”

The only requirements for cloud gaming are a device with an internet connection and a subscription to a cloud gaming service. And if that sounds too good to be true, it’s because it is — at least for now.

... and the reality

Though many game developers have jumped at the chance to develop cloud-based offerings, the industry has struggled to deliver on cloud gaming’s lofty promises. Fifteen members of the New York Times Wirecutter staff tested four of the most popular cloud gaming services — Xbox Cloud Gaming, PlayStation Plus Premium, Nvidia GeForce Now, and Amazon Luna — and concluded, “cloud gaming options provide service that can be difficult to predict or rely on, and it’s tough for us to recommend any of them.”

PC World offers a more favorable review of these cloud gaming offerings, especially Nvidia GeForce Now, but also emphasizes the critical importance of “both a stable, high-speed internet connection and low latency to the cloud gaming service.”

The Stadia story - an expensive lesson

Google’s attempt to capitalize on cloud gaming has arguably been the biggest failure of the emerging technology, with significant ramifications not only for Google but for the whole cloud gaming industry.

Released in 2019, Google’s Stadia was shuttered at the beginning of 2023 because it hadn’t “gained the traction with users that we expected,” resulting in Google issuing refunds for “all Stadia hardware purchases made through the Google Store, and all game and add-on content purchases made through the Stadia store.”

As Forbes explains, the central issue was that Stadia was attempting to get gamers to “own the games they played on the cloud, rather than just offering access to them for a monthly fee like a Netflix account.”

The consequences of this model and its failure damaged “the very concept of game streaming as a whole, as now it’s not just a debate about whether the tech is there yet (and often, it isn’t), but this is everyone’s worst fears about digital libraries realized, that you don’t truly ‘own’ anything and risk total evaporation, even from a megacorp like Google.”

The major issues with cloud gaming

There are currently two major issues plaguing cloud gaming: the ownership model (evidenced by Stadia’s failure) and persistent technical difficulties. Let’s take a closer look at the latter.

A comment to a recent Financial Times article identifies the key technical weakness as slowness of response: "The major issue has always been latency. A 0.5-second input delay with movies, television, and music is imperceptible and a non-issue. But it is crippling in gaming where users will refuse to play a game with that type of delay.”

This was confirmed by avid gamer Jesse Lennox who recently experimented with several different cloud gaming systems and shared the findings with Digital Trends. Lennox used “a wireless modem with 5GHz Wi-Fi” with a download speed varying “between 50 and 130-ish Mbps” — which is higher than the average mobile internet download speed of 42.07 Mbps, according to Statista. But even with faster-than-average speeds, Lennox encountered two significant issues with cloud gaming:

• Connection and input speed — The first two times Lennox attempted to connect PlayStation’s remote play option, it failed. Only on the third attempt did the remote play open, and only “after three or four minutes of connecting.” After successfully connecting, Lennox experienced a significant input delay when navigating the various menus. Lennox found Xbox’s Cloud Gaming loaded much faster, but suffered from a similar delay, describing it as akin to “playing underwater.”
• Visual quality — After just two minutes of playing a remote PlayStation game, “the visual quality completely tanked. I was looking at blocks of pixels tearing across the screen, all while the input delay somehow got worse. This lasted only a couple of seconds before my connection was dropped.”
Xbox Cloud Gaming’s visual quality fared better, but the gameplay suffered on mobile due to the small screen size. “Reading and learning a game became very difficult when the text, meters, symbols, and everything were shrunk down on my phone’s display.”`

These issues aside, Lennox did praise cloud gaming’s ease of access: “Cloud and game streaming has opened the door for so many people who can’t get access to dedicated gaming hardware. It can even act as a bridge for the already massive mobile audience to try out more types of games than they would otherwise have access to.”

Is there a market mismatch?

In the article on cloud gaming cited above, Financial Times reported that the French software house Ubisoft had completed what they described as “transformational cloud-gaming deal with Microsoft”, issuing a statement that looked ahead to an explosive growth in interest.

But the commenter to the article cited above also identified what might be an insurmountable obstacle to cloud gaming's commercial success: “The value proposition of cloud gaming only appeals to users that both 1) have a high end internet connection and 2) can't/won't pay for their own gaming device. " The commenter points out that the set of users who can afford high-speed internet but not a dedicated gaming device is probably too small a market to address profitably.

The future of cloud gaming

Given the persistent gameplay issues, cloud gaming does not appear to pose a current threat to traditional console gaming. However, the success of the streaming model elsewhere means game developers are unlikely to abandon endeavors to make cloud gaming a viable contender. “‘When Netflix first said it was going to go into streaming, their shares fell a lot and they were widely criticised,’” Yves Guillemot, chief executive of Ubisoft, told the Financial Times. “‘It’s going to be the same with video games but it will take time. But when it takes off, it will happen very quickly.’”