The Future of Digital Media: Cloud Gaming

The global video game market is $78.5 billion, the mobile game market for tablets and smartphones is $8.5 billion, and cloud gaming is $2 billion.

Cloud gaming will make the need to purchase hard copies of your favorite video game obsolete. Gamers will no longer need to wait months or years for the next version of their favorite game. And, gamers will have immediate access to add-on's, updates, and new features streamed right to their device. Cloud gaming will become a more integral part of how we access and play games going forward.

This is not good news for traditional console manufacturers like Sony PlayStation or game publishers like Electronic Arts (EA). To catch up, in September, Sony purchased Gaikai and EA purchased Swedish based ESN to beef up its cloud gaming offerings.

Traditional console makers like Sony (65 million PS3 units WW), Microsoft (67 million XBOX 360 units WW), and Nintendo (96 million Wiiunits WW) may soon face new competition from Comcast (22.1 million subscribers), Time Warner Cable (12.3 million subscribers), Cox (4.7 million subscribers), Verizon (4.5 million subscribers), AT&T (4.2 million subscribers), and others who are reportedly planning to enter the cloud-gaming space as early as 2013. There are almost 50 million digital TV subscribers in the U.S. Offering a game service makes perfect sense.

However, also In September, Steam went beta on its new mode called "Big Picture" to let 50 million gamers access over 2,500 game titles on a TV, PC, Mac, or mobile device. Valve also confirmed they are "frustrated with the lack of innovation in the computer hardware space, so we're jumping in" - into hardware development. Perhaps, a set top box like Apple TV and wearables like Google glasses?

Phil Eisler, General Manager of GeForce Grid Cloud Gaming at Nvidia, said that the setback at OnLive did not discourage Nvidia to back away from cloud gaming. He believes that there will be a comeback for the technology and there will be a lot happening next year. Asia leads the traction in consumer cloud gaming, followed by the U.S. market.

In the U.S. market, I look to new cloud gaming start-ups like CiiNOW, Playcast Media Systems, and Agawi to continue to push the technology in cloud gaming.

Ken Kajikawa
General Manager, Digital Media
Telx
kkajikawa@telx.com