Nabil Laredj is director of business development and licensing at Blacknut
The biggest gaming news of recent months hasn’t been the launch of the latest generation of consoles, but the rise of cloud gaming subscription services.
The appeal of cloud gaming isn’t just access to a huge range of titles for a fixed price.
A key USP is access; gamers can play their favourite titles via PC, TV and smartphones. All you need is a decent internet connection and a wireless controller, and you’ve essentially untethered console gaming from the console itself.
Based on our experience of offering our own cloud gaming service since 2018, the ability to play console games on a smartphone is a big draw.
Currently, 30% of streaming playtime is spent on a mobile screen as opposed to PC or TV, and 18% are using more than one device to play games.
I expect this mobile usage to climb as 5G adoption grows, and gamers are able to access cloud gaming on the move.
A key USP is access; gamers can play their favourite titles via PC, TV and smartphones.
An important question to ask is whether this newfound ability to play games which were exclusively PC or console on a mobile device will help or hinder the mobile gaming industry?
With a finite amount of hours in a day, will cloud gaming disrupt existing mobile gaming habits?
And what does it mean for publishers whose IP already exists for console and mobile?
Will they continue with a dual strategy, or replace their mobile strategy with a cloud gaming strategy instead?
Mobile operators want a slice
Who remembers the early days of mobile gaming when the operators were the kingmakers? All that changed with the iPhone, but, cloud gaming offers them a way back in.
The arrival of 5G networks - and the big investments made by operators in deploying them - mean that operators can launch their own cloud gaming subscription services, giving existing and new subscribers the ability to play on PC, mobile or smart TV.
Having effectively lost their grip on the mobile games industry and then missed the boat with the rise of video-on-demand, operators are understandably keen to not make the same mistake with games. The advantage they hold is the ability to leverage millions of existing subscribers, many of whom get their broadband, mobile and TV services from them.
Upselling cloud gaming is a huge opportunity. A recent poll conducted by the Mobile Video Industry Council found that mobile operators believe cloud gaming will generate 25-50% of 5G data traffic by 2022, with cloud gaming estimated to grow to $2.5 billion by 2023.
Mobile operators already have the key infrastructure to deliver cloud gaming, and of course an existing customer base of thousands if not millions of potential subscribers.
So for them the closest competitors for cloud gaming services are not pure games companies like Microsoft, Sony or Nintendo but rather Amazon and Facebook, who see gaming as a way to make their other services even more sticky.
Killing the mobile port of console IP?
Whereas cloud gaming is about removing hardware barriers, Apple and Google’s app-based mobile gaming experience is all about keeping users within their respective product ecosystem.
Using a revenue-share model they have built a hugely profitable business, leaving it to individual games publishers to drive engagement and spend.
The arrival of 5G networks mean that operators can launch their own cloud gaming subscription services.
App Annie’s The State of Mobile in 2020 report shows how lucrative getting mobile right can be, highlighting that mobile is now the world’s most popular gaming platform (with 55%+ market-share) and over $100 billion spent by mobile game consumers across all app stores in 2020.
Will cloud gaming eat into these revenues? I don’t think so. Mobile gaming and cloud gaming are different enough to co-exist.
We know that the majority of mobile gamers pay little or nothing to play, and it’s the outsized spending of whales that sustains many successful F2P titles. It also means that the types of games that do really well on mobile - with a few notable exceptions - are pretty unique to mobile as a platform.
However, I do think we’ll see a change in how new and legacy console and PC games are brought to mobile. Unless a publisher is invested in building a dedicated F2P strategy around mobile - which requires considerable skill and investment - the technological barriers separating mobile from other platforms are essentially gone.
Our partnership with console publisher Deep Silver is an example of this. We’ve recently added hit games Metro Redux and Saints Row to our cloud streaming service, making them playable on Android phones and tablets for the first time.
These are games that would never be released as standalone mobile games, yet they are now available to play on mobile.
Publishers will have tougher strategic decisions to make over the next-generation cycle about what they do with their licences to keep audiences happy and find the right platforms for their IPs.
Do they work harder to segment console and mobile gamers into two separate categories and create around the needs of each group thereby splintering the IP entirely? Or do they focus on a single version that is playable across many devices via the cloud?
The Call of Duty conundrum
Call of Duty is a great example of a franchise that’s been a hit on every platform.
The mobile version has been a massive hit for Activision in its first full year; it’s consistently ranked in Sensor Tower’s Top 3 for categories relating to gross and growth, alongside Fortnite and PUBG Mobile.
It’s estimated to have generated approximately $480 million in player spending in its first year.
By contrast, the console release of Call of Duty: Modern Warfare generated $645 million in 2019, and the lifetime sales of the franchise have so far topped 250 million copies.
But if we factor in the 46 million pre-registrations in China for Call of Duty: Mobile ahead of its impending launch there, the mobile version looks to be the future. A key advantage of mobile games is that millions more people own a mobile phone than will ever own a console.
Plus, with free-to-play games the cost of entry is, well, free.
So the mobile version is where the real revenues lie. But what would happen if Call of Duty was available to play via the cloud, on demand, wherever you want?
The two games offer a different take on the same IP, with the mobile version built specifically around F2P monetization, while the console version strives to offer the best possible first-person shooter experience with each iteration.
Crucially, both games are designed to make the best possible use of the platform they are published on and were never intended to be compared side-by-side.
Publishers will have tougher strategic decisions to make about what they do with their licences to keep audiences happy and find the right platforms for their IPs.
If gamers start to play both versions on their mobile, would that make Activision think differently about one of its most important franchises? Will the fidelity of the console version trump the monetization of the mobile version?
We can’t really know just yet, but this is not an outlandish scenario for publishers like EA and Ubisoft, who currently maintain different console and mobile strategies.
Open versus closed
It would be remiss of me to discuss cloud gaming on mobile without referencing Apple’s refusal to approve iOS apps that interface with cloud platforms.
Apple’s justification for this is based on the need to ensure any games playable via the app are ‘appropriate’; but considering that Netflix and Spotify are not subject to similar rules, it seems as though this is an attempt by Apple to prevent cloud gaming cannibalising its audience for Apple Arcade.
At the same time that Apple is doing its best to maintain its walled garden, we have games like Fortnite and Genshin Impact which don’t care whether you are playing on a console, PC or mobile.
Their phenomenal success shows how the separation between devices and formats is becoming irrelevant in an industry where games can be hosted online and accessed by anyone with an internet connection.
The history of the games industry up until now has been one of creative limitations, where developers have built incredible games despite the limits of the hardware in front of them. With even a basic smartphone able to run complex 3D games, and 5G networks offering fast data and low latency, this is a moment of profound change.
Over the next few years, we will find out which companies embrace this, and which try to protect the status quo.