Cloud Gaming's BIG Comeback - Hype or Future?

+ Exclusive Antstream CEO Chat

This, is Hideo Kojima, a mastermind behind iconic games, and Phil Spencer, CEO of Microsoft Gaming. When these two met in 2022, it wasn’t just for coffee. They announced a partnership for a secret cloud-native game, teased as a ‘never-before-seen concept’. An “entirely new medium”, as Kojima coined it.

Meanwhile, Microsoft's $69 billion acquisition of Activision Blizzard, its largest gaming deal, almost didn’t happen due to - yep - concerns over a cloud gaming monopoly. But with Ubisoft stepping in to share cloud gaming rights, the deal was sealed. And Microsoft's big cloud gaming ambitions stay on track. After that, leaked documents reveal Microsoft’s plan of a hybrid-cloud console coming in 2028 merging portable gaming with cloud technology – a modest innovation, yet another step towards what Microsoft is dubbing as “The Netflix of Gaming.”

So is cloud gaming's big moment finally here? After a string of high-profile busts, it seems to be making a huge come back.

And this time it’s different. But why now?

And what’s different?

And - do we even want this Netflix of Gaming?

Are we comfortable investing in games we don’t technically own?

Will we flick through games as we do movies, and never truly immerse ourselves?

It's a lot to unpack. So I spoke with two experts: Cloud Gaming Specialist Daniel Connery

“We think hyper-casual gamers aren’t players of Elden Ring, but once they have that instant ubiquitous access, that could completely change!”

And Steve Cottam, CEO of the world’s largest retro game streaming platform Antstream Arcade,

“Gaming is clearly going into streaming”!

Yep, and with cloud gaming clearly being back on the map of entertainment, let’s zoom in on that map to see how the world is gearing up.

Let’s rewind a bit. To understand today, we first need to look at yesterday. “Yesterday” had as series of missteps.

2002: Phantom Entertainment

First up on our journey, waaay back in '02, Phantom Entertainment stepped out with dreams of a console that'd stream games straight from the cloud. Spoiler alert: Due to their inability to deliver the promised technology, it vanished like... well, a phantom. Maybe they were just too ahead of its time.

2003: G-cluster

And then, there was G-cluster. Ever heard of it? No? You’re not alone. It popped up with tech that was kinda sorta cloud gaming before we even had the right clouds.

2010: OnLive & Gaikai

OnLive and Gaikai were up next. It seemed promising but the lag and the "is this all the games we get?" vibes just didn’t cut it. At the verge of bankruptcy, and Sony swooped in to snag both OnLive and Gaikai for what would become PlayStation Now.

Mid 2010 sees GameFly, CiiNow & PlayGiga dove into streaming, only to deliver a "Blockbuster for games" experience that missed gamers' expectations. By 2018, they vanished as well, ending up as footnotes in the 'what-could’ve-been' chapter.

2019 and Google jumps in with Stadia, making waves, which then crashed hard. Stadia had the brand, the buzz, but offered limited game selection, underwhelming performance, and a business model that failed to resonate with its target audience.

Also in 2019, and after multiple delays, Microsoft had it’s cloud gaming attempts with Crackdown 3. It had cloud-powered destruction mechanics, which were supposed to be revolutionary, but just didn't live up to the hype it was marketing.

Anyways. These were some of the early attempts of cloud gaming. “The dark times” as Sony's CEO Yoshida called these initial attempts because the tech just wasn’t ready.

But today? Almost every major tech company has launched their cloud gaming platform: Microsoft’s Xbox Cloud games, Sony’s PS Plus, Amazon Luna, Nvidia Geforce Now, Blacknut, Shadow and Tencent. You see, big tech's all in on cloud gaming. So back to the map:

So back to the map: the industry is booming, with projections hitting the stratosphere—North America alone could see cloud gaming revenues soar to $6 billion by 2027 - that’s 76M cloud gamers, more than the population of Japan. Europe’s cloud gamers are bound to reach 88M, more than the entire population of Germany - China, India and South Korea too are frontrunners all leaping towards a significant 2027 milestone.

So what’s up with these mega-projections? Why now? 4 major reasons:

(A) The tech terrain has evolved. If we go back to the map, Ill show that the US is set to expand its 5G and fiber network to 7 million new locations, with 5G being 10x smoother than 4G. And China, with 2M 5G base station already, has built another 600K in the last three months, as much as we built in 2 years. 5G and fiber optics are laying the red-carpet for cloud gaming’s grand entrance.

(B) We all know, instant gratification is the new norm. Consumer demand shouts “NOW”. The gaming community is hungry for that 'play right now' experience, and cloud gaming is setting the table.

(C) Microsoft, Sony and the likes see the writing on the wall and want to reach more gamers. Of the world’s 8 billion human beings, over 2 billion are gamers. “I think it's critical for us to deliver on the full promise of over 2 billion people playing, the opportunity to reach more of 3 billion people playing video games, to reach more and more people”. with golden ticket cloud gaming, they’ll reach these 2B.

(D) Data is the new gold rush. Knowledge is power. Data is power. And cloud gaming is a treasure trove of data, giving companies insights on what players truly want.

Simply put: It’s now because the stars and tech are more aligned than before.

And with this expansion, it's not just about increasing revenues or massive player counts. It's about breaking down barriers.

“I’m excited about the democratization of video games, the ability for people in all locations to play a game. Example Lies of P; not a lot of people would have a lot of exposure to, but it was on GamePass and went on to sell millions of games, now imagine that model where you have instant ubiquitous access all around the world, that’s just an incredible thought.” - Daniel

Ok, I like that thought. The democratization of games. Lies of P, for my mom, on her phone. On the couch. Sure, she could stick to mobile games, but cloud gaming brings AAA titles to her fingertips, seamlessly switching from phone to tablet without the fuss of downloads or updates. That’s a pretty cool idea. But how is that “democratization” building out technically? Let's explore the mechanics of cloud gaming.

…which is an offshoot of Cloud Computing. Here, games run on powerful servers in distant data centers. Instead of downloading a game to your device, you’ll be streaming the game from the servers. They process the game entirely. It's like streaming a movie on Netflix, but for games, also known as 'pixel streaming.' So when you shoot or dodge, that action is sent to these servers. They compute the outcome in real-time and stream that visual output back to your screen.

Imagine if there's a slight delay in the process. Lags can sneak in, especially if your connection isn't up to par. But again, this is where 5G will shine.

“You do need a good connection. networks are improving all the time and we're moving into a world of 5g, fiber connected everywhere, each year it becomes less and less of a problem.” - Steve

But a good connection is one thing, but it’s not the only piece of the puzzle.

“For cloud gaming or pixel streaming to be successful, it has to be almost completely perfect from UX to latency to graphics cards in the data centers. And one of the hardest issues is the supply chain of GPUs. Even before crypto/Ai, think about how much time it’ll take to order 1000s of the latest GPUs and install them on Day 1 to keep up with whatever the latest game is…you have to order them, then install them in data centers, configure it correctly and it just takes time, so the consumer is always going to be at least 6 months ahead of whatever is offered through cloud gaming.” - Daniel

That’s a valid point. Data centers can lag in securing the latest GPUs, BUT we gamers would also have to constantly chase the newest, most powerful hardware. Be it PC parts, mid-gen console upgrades, peripherals, or even the latest tablets, keeping up isn't cheap.

But luckily, not every game requires the latest and greatest hardware.

Enter Antstream Arcade, the largest Retro Gaming platform in the world. I mention them because

(A) they've cleverly combined old-school games with cloud gaming, and

(B) they are the first third-party game streaming service on Xbox.

Their service is a reminder that not all gaming experiences demand the latest hardware.

“I started playing all my music on Spotify and movies on Netflix, I thought hang on a minute, how do i get all my games i used to love - and I thought gaming is going into streaming, i want to play these old games so I put the two together and Antstream was born.” - Steve

It’s a powerful pivot, and yet, there’s common misconceptions around owning your own hardware. Many gamers just can’t envision abandoning their beloved gaming rig for cloud gaming, when the majority thinks that “Cloud Gaming Straight Up Sucks”…

And yet, if you think about it, subscribing to a cloud gaming service could actually be the more economical path.

“Now, what's interesting is what the consumer is prepared to pay for their cloud gaming service. Because what people don't think about, my, I'll use my son as someone who really is a gamer and would spend. 10 hours a day if he could every day playing games, burning about 350 watts on his GPU on his PC. And then the CPU is about 650 watt PC. My electricity bills were substantial. And actually the cost of the electricity for him to play those games was many multiples higher than a cloud game streaming subscription service. And people forget that. So it was actually cheaper.” - Steve

Electricity bill - come to think of it - it does make sense to look at gaming as something becoming more and more of a utility - game as and when you need it.

“This goes back to the 1970, the idea of utility computing. Even in the 70s they thought we could have processes running in one area and other in the dummy client which we connect to it. The average American at least, uses 3000L of water per month. The idea is you would never order that 3kL of water in your living room. That’s why we have utilities. With water, maybe you don’t want the tap water so you either order ahead the premium water from a geyser or spring or what have you. Where the analogy continues, the quality of the utility you’re getting. Everybody will have to access to it. However some people will be getting tap water that won’t be the highest quality while others would get the highest quality water that money can buy. And you’ll see that with cloud gaming, you’re gonna see people playing games on their game pass with pixel streaming, but when there’s the latest Cyberpunk 2077, 2, they’re gonna go out if they have the means to get the latest GPU, people who can afford the premium bottle of water.” - Daniel

And that’s what I believe it’ll boil down to - Gaming as a utility—easy, on-demand—available whenever, wherever, for whoever wants to play. This doesn’t mean it’s the end for those who love their gaming hardware; instead, it opens up more options for those who can’t afford gaming hardware and the maintenance of it. The focus is moving from having to own the latest equipment to simply having access to games, just like we have access to water or electricity without owning the entire system at home.

“BUT YOU DON’T OWN YOUR GAMES ANYMORE - AND THAT’S A BAD THING!”

No. I get it. Cloud gaming means subscription model means lack of ownership. So there’s this perceived threat to traditional game ownership and naturally a sort of resistance to the idea of not owning your games both digitally or physically. And that concern also goes hand in hand with the idea of cloud gaming platforms taking down games whenever a game isn’t profitable enough. A valid concern, so I asked Steve what he thinks about ownership as a retro gamer:

“This is a really interesting one because it's a challenge that I think about every day. And I get it. That is a real problem. You see that playing out on Netflix and Amazon as content shifts and moves from platforms. So yes, ultimately the people that own the IP have control over it. They choose whether they want their games on our platform or they don't. But I have this deep seated belief that if you want to preserve something, you have to make it relevant to everybody and accessible to everyone.” - Steve

I'm with gamers who worry about owning games digitally. It's a bit nerve-wracking to think that games could just disappear if they don't make enough money or get caught up in company politics.

But, on the flipside (there’s always this flipside), not everyone sees ownership as a defining part of their gaming experience. For many, the convenience of access is key. It’s the classic vinyl versus Spotify debate:

”It's the same for music. If you think about it, there are a lot of people that will say to you, I'm never gonna listen to Spotify. I want my music on vinyl record. I want to put it on a record player and hear the pop of the needle when I drop it. And there's a lot of people enjoying the music on Spotify that don't want to go to those lengths of the experience.” - Steve

But how can we trust that these few companies will play a fair game with us? Do we now need to rely on them to act in good faith and not exploit their control over game availability or even political leverage?

“I think it's going to be a combination of consumer awareness, consumer protection, and possibly even essentially the free market in determining how we're going to put all our eggs in one basket and watch that basket as Mark Twain would say, work, so putting a certain amount of trust in power in these companies. We need to make sure that there are not, I guess censoring for lack of a better word, or changing the creative intent of the games. We have to find the balance and we have to do it together.” - Daniel

Yeah, the dynamics between corporations, consumers and game devs - it’s always been a delicate dance, hasn’t it? And this dance goes beyond established gaming communities. For emerging markets, where access to the latest gaming hardware is often limited by costs, cloud gaming is a game-changer, quite literally. To them, games can be as expensive as paying 2-3 months of rent.

“There's different 5G experiences and speeds across different countries. So the 5G in the US is typically not considered as good as maybe 5G in Brazil or Europe.” - Daniel

And with this, the real deal lies in hybrid - or even better - cloud native gaming. Hybrid cloud gaming involves processing parts of the game locally on your device, with the cloud managing more demanding tasks, like AI NPCs, explosion physics, or background animations. But the future looks even more cloud-centric with native cloud gaming, where games are exclusively engineered for cloud. In fact - game dev in the cloud, for the cloud - could be a reality faster than we think. Cloud-based game devs don’t need to optimize games for each and every platform anymore; it means one single game creation stage. It means lower maintenance costs. Costs that can be spent on marketing. And with this, game devs will have access to a much larger player-base. More cloud, more casual players, more engagement. AND more exposure for indie devs.

“Look, building a game and marketing a game is incredibly difficult. You know, there's a reason why such a vast majority of games don't make money. When we were at the Gamescom show this year, we were walking around looking at all the indie games and there was some incredible pieces of content there. Absolutely beautiful games.

And myself and one of the people on the team, we just said, look, isn't it a shame that so many of these games sadly won't get the exposure they need to be the hits they deserve to be. And that's because they're in a world where you're competing against massive companies that have hundreds of millions of dollars to grab people's attention.” - Steve

So while there are a few bones of contentions around ownership, subscription models, and corporate governance, cloud gaming will inevitably allow game devs to tap into an untapped gold mine of new gamers who might not even know that they are gamers. It democratizes access, lowers barriers to high-cost hardware, and even for pro-gamers, especially in the esports world. Today, esport gamers all need to have identical, top-tier hardware. With cloud gaming though, they can engage in crazy matches without having crazy gaming rigs. It’ll even the playing field with high performance gaming accessible from anywhere. The real test comes down to performance of course.

"You know, these people need to have all the same hardware, all the same rigs. But again, I think cloud gaming could actually level that out. I think it was Nvidia did a test and they got some pro e-sports players and they put them down in front of a cloud gaming rig versus a local rig and they couldn't tell.” - Steve

What I personally am really excited about is that I get to just try out any game without paying full price. I can browse and test-play games for like 15 min or so, and see if they’re really for me.

“Yeah, I actually think that's a wonderful idea because one, within that 15 minutes, you're less likely to experience any kind of issues with your latency or whatever. You're also not going to be losing too much money from whoever the publisher is because you're only playing 15 minutes at a time. And I think it's just a joy and great idea all the way around. So I think we're gonna see a lot more of that in the future too.” - Daniel

Yeah, the future. In a way, I can’t wait to see that becoming the norm. Options need to remain, whether that’s in subscription models or access to physical hardware, I like options. But I like the idea of dropping by an online arcade with the freedom to try any game without needing a pocketful of coins. Snackable games. Instantly. It’s a change that takes time, for sure, but again:

“Gaming is just a form of entertainment, like music, movies and books. And I don't know, I can't speak for everyone else. But personally, I wouldn't want to go back to a day where I have to go to a shop to physically buy a physical item or even order it.” - Steve

Same here; to be honest; it’s all about that instant gratification isn’t it? We want it now. no downloads. no waiting. and speaking of waiting: The secret game Hideo is working on? Hasn’t been so secret for a while now. The Game Awards announced OVERDOSE this month. And fans are all over it. I certainly can’t wait to stream that baby on my hybrid-console.

And until then, check out HIGHSCORE, a cloud gaming startup that allows you to play any Steam game on any device. You can apply for Early Access and join their Discord for updates and availability.

Happy Gaming!