Gaming Industry: The rise of Cloud Gaming and Amazon’s Plans
Playing games is without doubt a ubiquitous leisure and entertainment activity. Gaming is particularly appealing to younger people especially those aged 18-24, with men playing much more than women. Moreover, as expected, high incoming individuals tend to spend the most significant amounts in game purchases. Nevertheless, in total many people from different ages and across many different counties spend some of their free time playing games. Hence, the number of gamers worldwide is estimated to be more than 2 billion and continually rising, which has created a thriving market that exceeds $130 billion in value for 2018. During the last couple of years, the market has been growing based on rates of over 10% per annum.
The lion’s share of the market concerns revenues from digital games, which are estimated to represent an approx. 90% of the total market value. Furthermore, mobile gaming (i.e. playing on mobile devices) is currently the most important part of the digital segment of the market, given that it currently contributes almost 50% of the total revenues. In this landscape market leaders and internet/cloud giants are rolling out innovative products in order to compete for market share.
For over five years, gaming consoles like Play Station (PS) and XBOX have been dominating the market and gaining popularity among gamers. However, the world of gaming is evolving in order to improve user experience and offer more convenience to end-users. Specifically, gaming platform providers are working towards enabling gamers to play the games they want, with the partners and friends they want, regardless of time, device and their location. Gaming experiences will therefore become similar to music and movies: They will be accessible from different screens on demand.
The evolution of gaming is reflected in the latest products and services of major gaming vendors. In particular:
In this landscape, Amazon is planning to aggressively enter the gaming market. The company has already a footprint in the market, based on its Twitch live streaming video platform. Twitch is owned by Twitch Interactive, which is a subsidiary that Amazon acquired four years ago. Twitch emerged in 2011 as a spin-off of an earlier streaming platform (Justin.tv) in order to provide video game live streaming, along with sports broadcasts, music broadcasts and creative content. Its users can access content either live or based on a VOD (Video On Demand) modality.
Twitch has much smaller momentum and market share than competing platforms, which means that Amazon will have to roll out more innovative and differentiated services than what is currently provided by Twitch. In this direction, Amazon is thinking of offering video games that can be played without a need to download them. This unique selling proposition could be combined with hardware and device flexibility in order to allow Amazon to position itself in the competitive landscape. The company will capitalize on the company’s excellent cloud hosting services which have set it apart from the rest in other markets. Hence, the launch of Amazon’s service will allow the company to compete against the earlier outlined cloud gaming platforms.
Since many years the gaming industry is driving innovation in user experience and providing pleasure to billions of citizens worldwide. Despite their success and established base of users, gaming providers need to continually evolve and sometimes reinvent their services. Whether a powerful cloud provider can enter and disrupt the cloud gaming market remains to be seen, even in the case of Amazon itself.
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