Many companies are convinced that cloud gaming is the future. Among them, we have Microsoft with its Xbox Cloud division, as well as Nvidia with GeForce Now. And they are not the only ones.
We have been hearing the claim for years that game streaming will transform the industry in the same way Netflix did with television and movies.
Obviously, that has not happened, and the spectacular failure of Google Stadia seemed to illustrate how overly optimistic the companies launching the service were being. However, Ubisoft still believes it will happen, though it may take some time.
The future lies in the cloud, and Netflix is the proof
To appease the UK Competition and Markets Authority (CMA), which had blocked the acquisition of Activision Blizzard for fear it could disrupt the cloud gaming sector, Microsoft promised to transfer to Ubisoft the cloud streaming rights for all current and new Activision Blizzard games for PC and consoles to be released in the next 15 years.
In statements to the Financial Times about the agreement, Yves Guillemot, CEO of Ubisoft, said, “When Netflix first said they were going into streaming, their stock plummeted and they were heavily criticized.”
“Today, we see what they’ve become,” he added. “The same will happen with video games, but it will take time. But when it takes off, it will be very rapid.”
A bad example: Google Stadia
Indeed, the streaming gaming market has not come close to being as disruptive as Netflix. The biggest casualty in the sector was Google Stadia, which shut down last year after failing to meet Google’s expectations.
When it launched in 2019, Google boasted that Stadia was more powerful than Xbox One X and PS4 Pro combined, claiming it would eventually be the game streaming service consumers would choose over a PC or console.
Services offering a streaming option, such as Xbox Game Pass Ultimate and PlayStation Plus Premium, are expected to generate $3.2 billion in 2023, or 2% of all consumer spending on games.
Some analysts believe that this figure will at least double in the next five years, but Guillemot believes that the industry projection will be even greater than that prediction. “That’s what drove us to move forward with the agreement [with Microsoft],” he concludes.
Guillemot added that Ubisoft’s acquisition of streaming rights for Activision games, combined with increasingly powerful mobile gaming devices like the iPhone 15 Pro, will help them establish a stronger presence in regions outside of the United States and Europe where consoles and PCs are not as widespread.
