The impact of cloud gaming in the videogame industry

Cloud gaming is a concept that is becoming more and more common within the videogame industry. Through the use of cloud technology, players can enjoy their videogames through internet streaming of data from datacenters around the world without the need of owning a piece of very powerful hardware like in previous times. Not only this, but the price of entry is considerable smaller when comparing to the previous paradigm within the world of gaming. Despite these advantages, this concept has struggled to gain traction over the past few years. Plus, it is not very clear what are the impacts of this technology in the industry it resides. This study aims to identify these factors by answering the following research questions: 1. How does cloud gaming impact the videogame industry?; 2. What drives cloud gaming adoption by the videogame industry?; 3. Which are the key critical challenges and opportunities when implementing a cloud gaming solution?. In light of this, the objectives to achieve are the following: 1. Analysis of the main characteristics of cloud gaming and its differences from traditional gaming; 2. Present the main challenges of cloud gaming; 3. Understand the main opportunities of cloud gaming. To achieve this, it was opted to follow an exploratory approach given the lack of research in the area alongside a series of interviews to industry experts to collect data for analysis. Following that, transcripts were built, analyzed and discussed. It was possible to conclude that cloud gaming impacts the industry in three main dimensions: technology, value chain and the industry’s revenue streams. On the first dimension, the low barriers of entry in terms of hardware, the higher set of mobility and the ability to work on multiple devices were appointed as major opportunities for this technology which increase accessibility to this industry. Looking over the value chain, the opportunities reside in the developers through cheaper and faster development and finally, more revenue streams arise due to the advantages of this technology. There are, however, several factors that hinder this adoption of cloud gaming. The lack of quality internet infrastructure and skepticism among consumers prove to be two challenges that are difficult to overcome which may be one of the reasons why this technology has not really taken off.