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February 7, 2023
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The cloud gaming market is expected to reach nearly USD 7.4 billion in 2028, according to Brandessence. With growth compounding annually, Newzoo estimates that cloud gaming can reach USD 6.3 billion in global consumer spending by 2024. While cloud gaming won't fully replace traditional PC and console gaming, it opens many possibilities for developers and players.  Many good cloud gaming services exist on the market now, but they all face the same challenges, with some already shutting down. But there is one solution that delivers a profitable approach to incorporating cloud gaming as part of a developer or publisher business strategy: Xsolla Cloud Gaming. Let's delve more into the details.

What is cloud gaming?

Cloud gaming means playing video games on remote servers without downloading or installing them on a local PC or console. Similar to other entertainment streaming services like Netflix, the game is streamed from the cloud and requires a reliable internet connection. The difference is that the game is rendered on a remote PC, and it picks up player inputs so they can play and interact with the game locally on their own device.  This technology opens up new opportunities for both creators and players. Cloud gaming enables developers and publishers to reach a broader audience and generate more income by lowering the hardware bar and financial limitations. For players, this means they can access and experience high-quality, new games without needing to purchase the latest gaming computer. 

The problems with traditional gaming

  • Severe tech requirements limit the player base. Current game system requirements, often pushed by the continuous release of next-gen gaming hardware, limit the number of potential people who can play new games.
  • Locked lifetime revenue. This game hardware limitation means fewer players, resulting in 15-20% less lifetime revenue for publishers. 
  • Limited monetization potential from traditional gaming. Besides in-app purchases, no monetization model allows developers to keep earning game revenue after initial game sales.

Cloud gaming has its own challenges

Prominent brands have already taken advantage of increasing interest in video games, launching cloud gaming services to provide an affordable solution and expand the market. However, as we saw in the case of Google closing its Stadia service, not all companies can successfully navigate the persistent challenges and many end up shutting down.  Why does that happen? There are several factors:
  • Cloud gaming requires a fast, secure, and stable internet connection. Even a minor instability can cause latency issues and degrade the game experience.
  • Cloud gaming requires expensive hardware, and after spending millions on powerful servers for their data centers, companies can take years to become profitable.
  • Cloud gaming services need to have a presence in many regions to cover player needs everywhere, but the high cost of hardware and infrastructure can limit worldwide access.
  • Cloud gaming pricing can be cost-prohibitive for some players, making the monthly subscription model unsustainable long-term and putting a strain on company resources.

Go beyond hardware limits with the cloud

Our Cloud Gaming solution lets developers and publishers distribute PC games through branded websites, allowing their players to stream and enjoy a high-quality game experience without needing a gaming PC. These websites also act as a central hub for community engagement, analytics, increased revenue generation, and more. One big difference between Xsolla and the typical companies that offer cloud gaming: we are an aggregator of vendors and streaming platforms, supplying developers and publishers with cloud and streaming resources that cover most of the globe. This results in savings on hardware purchases and a much broader audience reach worldwide. Additionally, we provide developers with a new monetization model: pay-as-you-go (PAYG). With this model, players pay only for the time they spend in a game. This helps control their spending and not waste money. For example, instead of paying for a monthly subscription and playing only twice a month, with PAYG they pay only for the time they actually spend playing. According to Newzoo's report, 64% of cloud gamers play less than twice a week, so PAYG is more beneficial for them than purchasing a subscription. 

Xsolla Cloud Gaming is easy and profitable to implement

Cloud Gaming Solution allows developers and publishers to:
  • Attract new audiences: access players who can't purchase a game because of hardware or financial limitations.
  • Open a new distribution and user acquisition channel: build a direct-to-consumer sales strategy via a branded website that acts as a hub for your players.
  • Gain new revenue streams: increase revenue from released titles with a new monetization model.
  • Work with one trusted partner: Xsolla covers everything, starting with hardware rental. We also provide website customization and player data storage.
  • Integrate with just a few steps: fewer steps mean faster time to market, which translates to faster revenue generation for your business.
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