A new report analysing the trends and opportunities in the games industry has revealed how Netflix-style streaming services are set to be the “next big revolution” in gaming.
The Video Games report – UK Video Games: Heterogeneous not homogenous report from Edison Investment Research shows that the gaming industry is set to follow in the footsteps of TV and film trends with subscription-based streaming platforms taking over from buying physical games or downloading them.
Gaming streaming services will see games rendered in the cloud and streamed live to a ‘dumb’ (or de-powered) console or digital TV. “Although still a number of years away from significant user penetration, streaming is already being used at the margin to help monetise the back catalogue,” reads the report. “What is holding it back from the mainstream is that streaming requires robust global communications infrastructure, reduced latency and high-bandwidth, low-cost distribution.
“Whether a publisher model or a channel model is used (such as Netflix or Spotify), significant investment is going into developing effective video game streaming models and the associated hardware. The result is that the publisher/console owner has a direct relationship with the consumer and the ability to offer content direct through a subscription.”
The speed of which these services can grow will be largely down to how quickly service providers and networks can roll out 5G infrastructure, which will enable the faster internet speeds needed to stream video games without interruption.
“Internet infrastructure in many core jurisdictions will need to improve markedly for streaming to become mass-market; latency and lag are currently prohibitive and are likely to remain so for years to come. However, ultimately, the lure of a subscription-based model will be compelling to both publishers and console manufacturers, even if only to monetise their archive of older titles,” says Edison’s report.
“This trend can be played through major publishers (eg Electronic Arts), the console manufacturers (Microsoft, Nintendo, Sony and Google) and cloud service providers (Google, Amazon, Microsoft).”
The report also cites esports as another revolution in the games industry that will have “a significant impact on its future development, but which today has relatively low visibility beyond its select audience”.
“esports provides a further way to build a community around successful titles, extending the life of the game, growing its audience and providing ancillary revenue streams from advertising, sponsorship and merchandising,” says the report.
Richard Williamson, director of TMT at Edison Investment Research, commented: “The games industry has grown exponentially from its beginnings as a fast-moving playground for enthusiasts more than 40 years ago into a $138bn behemoth that has spawned some of the world’s largest companies and created a global superpower that produces revenues greater than the film, television or music industries.
“In this report, we have tried to analyse the market, exposing the drivers behind the industry as well as the development of gaming alongside the development of pioneering technology. As such, we hope to give companies and investors valuable insight into the future of this increasingly lucrative market as it matures and continues to innovate.
“What is certain, is that this global industry is continuing to grow, evolve and fragment. UK Video Games: Heterogeneous not homogenous highlights the opportunity for investors to understand the ever-changing landscape of this fascinating and expanding industry.”
Like this content? Sign up for the free PCR Daily Digest email service to get the latest tech news straight to your inbox. You can also follow PCR on Twitter and Facebook.
The PCR Awards 2019 take place on 6th March at The Brewery, London. Buy your tickets here.