The launch of Google’s Stadia cloud gaming service last week may have been sub-optimal, but two thirds of senior gaming executives believe that games companies will need to offer cloud-based games within five years or be left at a disadvantage at a time when category growth is slowing, research shows.
EY surveyed 236 global video gaming senior executives, from independent developers to large game publishers, and found that 70% of them expect the next five years to be rather more challenging than the previous half decade.
That’s because there are a growing number of new entrants vying for market share while there is also slower growth of new gamers. At the same time, development costs are expected to increase, exacerbated by a shortage of talent.
And as businesses look to differentiate themselves, 45% of video gaming executive respondents indicated that sales and marketing costs will also rise, by at least 10% over the next five years.
The study highlighted a couple of key trends that will define the future of video gaming: cloud gaming and e-sports.
“As competition continues to intensify, cloud-based streaming is poised to be the next major video gaming disruptor,” said Scott Porter, Partner – Advisory Services, Ernst & Young LLP.
“The advent of cloud gaming, especially when combined with the rollout of technologies such as 5G, represents more than just an opportunity for the industry – it’s a strategic imperative,” he stated.
The telecoms upgrade will mean most video gaming companies will distribute Triple-A games wirelessly.
The findings further suggest that e-sports has the potential to improve brand awareness across the industry: 72% of respondents said e-sports is already making a strong contribution to the brand and image of video gaming companies, while 70% believe that it has the power to draw new customers to games.
They’re less convinced, however, that e-sports will become an important source of new revenue: 23% believe it will contribute nothing toward industry revenues in the next five years, while 34% expect it to contribute up to 10%, and 43% say it will add more than 10%.
The Verge described the launch of Google Stadia as “an absolute mess, overpromising and underdelivering at every turn” but it was impressed by the tech and its ease of use.
Sourced from EY; additional content by WARC staff