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Cloud gaming revenues to top $400m in 2014

But can existing services survive until the next upgrade to home gaming technology?

Cloud gaming from services such as OnLive and Gaikai could generate revenues of around $411 million in 2014, according to a new report by Screen Digest supplied to GamesIndustry.biz.

However, companies offering on-demand games services may struggle to find sustainable business in the short to mid-term, as they struggle to differentiate their offerings from established distribution and sell to an audience already equipped with the technology to play the latest releases.

"Crucially, many gamers, particularly in mature Western markets such as the US, the UK, France and Germany, who are interested in the biggest games from the best-known PC and console game publishers already have the latest equipment capable of playing these titles," said the report.

"Not until customers are asked to spend significant sums to upgrade to the next generation of consoles in the 2013-2014 timeframe will the value proposition of consumer-focused video-streamed games-on-demand services really come into effect. The big question is: Can existing services survive until that window?"

The report also compares current distribution methods to emerging streaming games offerings, and notes a "major hurdle" as prices are too similar, with consumers unlikely to see a significant reason to change from boxed or digital downloads to cloud gaming.

The report's author, Ed Barton, said that he expects companies to experiment with business models between now and 2013-2014, when a new wave of home gaming technology is likely to hit the western markets.

"On a standalone basis, it looks as though video-streaming games-on-demand services will have a tough time initially," said Barton.

"Key to their future potential will be territorial expansion and broadening the target platforms away from the PC into connected TVs, set top boxes, mobile platforms and possibly games consoles."

The report estimates that in North America, cloud gaming will generate revenues of $332 million in 2014.

In Europe a total of $79 million in revenues is expected in 2014, with the research noting that OnLive has already inked deals in the UK, Belgium and Germany, as operators focus on the region and its growing penetration of broadband.

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Matt Martin avatar

Matt Martin

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Matt Martin joined GamesIndustry in 2006 and was made editor of the site in 2008. With over ten years experience in journalism, he has written for multiple trade, consumer, contract and business-to-business publications in the games, retail and technology sectors.

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