Cloud Gaming & The Convenience of Streaming Media
A dive into the history of the digitization of media and why game streaming is finally poised to takeoff
Positron is a blog that covers topics related to technology, business, society, and everything in between that glues it all together. In this post, I discuss Cloud Gaming.
Photo by Lorenzo Herrera on Unsplash
Where We’ve Been
For decades, there has been a long march towards the digitization of what was once primarily physical media. The key driver of this shift? Convenience. Time and time again, consumers have chosen convenience at the expense of ownership; even more so if they are given a better entertainment experience. Historically, music is often cited as the most characteristic example of this phenomena. We first transitioned from exclusively live music to records that we could play from the comfort of our own spaces. Next, we introduced the concept of portability to the music listening experience with radio stations, cassettes, and CDs. In the late 90’s and early 2000’s, digital downloads came onto the scene, an era culminating in the infamous bankruptcy of Napster and the rise of Apple’s iTunes. Finally, over the past 15 years, music streaming has been steadily gaining ground starting with early disruptors like Spotify & SoundCloud and later adding services from larger players such as Apple Music and Google Play Music (now YouTube Music). In just the last five years, the number of people who subscribe to music streaming services has seen an increase of over 5x to the tune of ~50+ million people.
What does that look like for revenue? In 2019, streaming services & digital downloads took the lion’s share (89%) of revenue in the music industry. Physical media only accounted for 10% of music revenue (and that percentage is declining steadily YoY).
Much like in music, the gaming industry is experiencing a similar shift away from physical distribution. In 2009, 80% of game sales were physical purchases. In 2018, just 9 years later, digital downloads accounted for 83% of game sales.
Source: Entertainment Software Association
The shift away from physical to digital consumption of the gaming industry began almost twenty years ago, around the origin of the now mammoth sized PC video game license distribution service Steam. Starting with just 7 games on the service at it’s inception in 2004, the service now boasts a collection of over 8000 games. On the console side, the Playstation Store and the Microsoft Store account for a rising percentage of video game sales on their respective platforms.
The Evolution of Steam’s UI
Source: Steam
Given the two decades of rapid digital growth, why has streaming taken so long to disrupt the gaming industry? The simple answer is the amount of compute resources needed to achieve a good game streaming experience is vastly greater than the compute needed to achieve similar results in other media such as music or television / movies. Would be Spotify-esque disruptors with limited resources did not have the ability to achieve low latency game streaming at scale.
Gaming is still a primarily physical industry in the sense that an individual consumer is required to invest a non trivial amount of money into machines & equipment in order to achieve an “optimal” or even acceptable experience when playing state of the art games.
Take for example the most anticipated game of 2020, Cyberpunk 2077. It utilizes compute heavy graphical enhancements such as ray tracing and Nvidia’s DLSS 2.0 on compatible hardware to produce stunning visuals.
The hardware necessary to run Cyberpunk at the highest graphics levels will undoubtedly cost a lot and even having an acceptable experience may require some upgrades for those who already own gaming PCs.
CD Projekt RED has yet to announce their official hardware requirements for Cyberpunk 2077, but, according to Tom’s Hardware, the expected total cost of a PC to run Cyberpunk at an acceptable level is $857. Running the game at the highest graphical settings more than doubles the price to $1843, largely due to paying a premium for a more capable GPU and CPU.
Cyberpunk 2077 'Minimum' Hardware
Corsair Carbide 175R : $60
Corsair CV 650W Bronze : $70
TOTAL PRICE: $857
Cyberpunk 2077 Recommended Hardware
NZXT Kraken X63 : $149
Asus TUF Gaming Z490-Plus : $190
Phanteks Eclipse P400A : $75
TOTAL PRICE: $1,843
The technology around game streaming isn’t exactly new. Sony’s game streaming service Playstation Now has been around since 2014, it’s tech based on the remnants of previous services such as OnLive and Gakai which had the technology to offer game streaming to users over a decade ago. The reason why game streaming did not take off back then, and why it’s beginning slowly gaining traction again now, is due in part to several key factors:
Internet Speed & Availability
In 2007, the download speed for the average American was less than 5 MB/s per second; a significant portion of the population’s only way to connect to the internet was via DSL.
Source: Akamai Technologies
By 2017, American download speeds rose to 18.7 MB/s, still well below the broadband definition and not even close to countries such as South Korea where the average download speed in 2017 was 28 MB/s, but enough to stream games reliably.
Source: Google Stadia
Why are American internet speeds important in regards to game streaming?
After China, the United States is the second largest market for video games with expected revenues of ~19.485 billion in 2020.
Source: Statista
It is critical that American infrastructure is capable of handling for game streaming otherwise the total addressable market shrinks significantly, making it harder to justify the investment in resources needed for cloud gaming or to bring third party developers on board with any cloud gaming platform. For a variety of reasons that deserve their own blog post, building a platform that includes both the Chinese and other top 4 markets would be incredibly difficult. That being said, there are active projects aiming to bring cloud gaming to the Chinese market from within the country.
Another key development in this area over the last decade is the release of better video compression algorithms, namely VP9 (and in the future, AV1 / H.266). In comparison to it’s predecessor VP8, VP9 is much more efficient allowing for better video compression at a lower bitrate. For gamers, this efficiency translates into the ability to have a high quality game streaming experience with less worry about hitting their data caps.
Resources & Infrastructure
Ten years ago, the modern cloud industry was still very much in it’s early stages and not known as the revenue powerhouse it is today. At the time, Sony and Microsoft were either not actively working on using cloud platforms to deploy game streaming tech or it was not a top priority. In addition, the companies that were doing so simply did not have the resources to make such a service work at the scale required the masses to adopt it as their primary way of playing video games. Furthermore, even if they did have the resources, the infrastructure required to run a service without running into latency issues at scale was just not mature enough at the time.
Since then, modern edge computing technology has quickly such that multiple major cloud providers have edge nodes deployed across data centers in various geographical regions around the world. For cloud gaming, that means reduced jitter and the consistent latency levels required for an acceptable playing experience. Furthermore, creating such a service is more cost effective than ever before.
In addition to the rise of edge computing, hosting games on cloud services has also become much easier with new infrastructure meant specifically for gaming.
5G Millimeter-wave Node
Source: The Verge
Another significant shift that’s occurring is the advancement of broadband cellular networks. 4G LTE networks were nascent in the world of wireless communications a decade ago, and, even today, the capabilities of 4G networks are not well suited for real time game streaming. Today, 5G networks, which offer speeds upwards of 10x that of 4G, are beginning to roll out across the world. 5G networking capabilities enable mobile devices to take advantage of the rise in edge computing, key to making cloud gaming at scale possible, while also improving the overall mobile connectivity experience in a variety of ways (especially when it comes to latency).
Consumer Sentiment
In 2013, right around the launch of the generation of consoles that included the Playstation 4 and Xbox One, a heated debate was taking place over digital rights management (DRM) and the ownership of video games.
Consumers were upset about a rumor that the Xbox One would require an active internet connection at all times in order to block the ability for gamers to play used games or share them with others. That year at E3, Sony took advantage of the rumors surrounding Microsoft to make it clear that the Playstation 4 would not follow in the Xbox One’s footsteps. Then Sony America CEO Jack Tretton, upon mentioning that Sony will impose no new restrictions on used games, was met with thunderous applause.
For those who were following these developments at the time, who could forget Sony’s famous promotional video focusing on the ease of sharing Playstation 4 games.
Ultimately, Microsoft opted to reverse course on the idea, giving up on the “always-on” ideal and patching the Xbox One on release day with an update that reverted the console to Xbox 360 era blasé DRM policies.
In this environment, it would be hard to picture gamers accepting services which go a step beyond platforms like Steam and do not allow the consumer to download games locally while requiring a steady, high bandwidth connection.
However, in the seven years since this video was released, much has changed. Looking back on it, the ad seems almost archaic. How many people these days share discs with others, let alone buy them in the first place? It is clear now more than ever that for the modern consumer convenience trumps the need for physical ownership.
"We may have been right. What we were wrong about was that it's just too soon. People just weren't ready to make that leap right away." — Albert Penello
Although digital first gaming did not take off as early adopters has hoped it would, the work to digitize gaming continued at a fast clip.
Here, Sundar Pichai demos game streaming tech in Google Chrome in 2012, an example of Google’s early foray into cloud gaming technology, one that would continue for the rest of the decade.
Where We Are
Bringing things back to present day, there have been many new entrants into the cloud gaming space:
Nvidia brought GeForce Now out of beta in 2020.
Google, after the trail run of Project Stream, launched Stadia in 2019.
Microsoft launched XCloud in beta in 2019.
Shadow, similar to GeForce Now, which allows you to stream a PC to other devices. However, it is essentially a Desktop as a service (DaaS) as you can use it for any other task a PC can be used for locally, gaming included.
XCloud’s Xbox One Server Blades
Source: Microsoft
The key differences between these services lie in their implementations. GeForce Now and Shadow essentially allow a user to have access to a PC in the cloud, meaning the and no porting of games is required. XCloud currently uses actual Xbox One devices transformed into server blades; yet again, no porting is required as all Xbox One games are already compatible. Stadia, however, takes a different approach and runs games on Linux blades. Thus, adding games to Stadia will require game developers to port existing games to Linux. To aid developers in this task, Stadia tools are integrated into a suite of developer tools commonly used in the industry.
Stadia’s Developer Partnerships
Source: Stadia
One differentiator Stadia has that makes up for the need to port games is the unique the capabilities of it’s platform. Stadia’s SDK allows developers to add cloud specific features to games running on Stadia, which I will discuss in detail later on, that take advantage of the fact that the games are running on cloud infrastructure. In comparison, the GeForce Now and XCloud SDKs focus on enabling the seamless “click-to-play” user journey that is already endemic to Stadia as a platform. In that sense, Stadia is currently the only platform embracing cloud gaming as a means to provide not only convenience, but as a means to unlock new gaming experiences that were previously impossible.
In 2020, Microsoft says it will explore a setup similar to Stadia in which it will have dedicated PC server blades (freeing it from the hardware limitations of the Xbox series) in addition to upgrading the Xbox based blades to the newer Xbox Series X hardware.
Where We’re Headed
Opportunities
No More Upgrades, No More Updates
To be more specific, the responsibility of upgrading hardware and patching games will shift away from the consumer and onto cloud gaming platforms.
One of the biggest gripes many gamers have with digital downloads today is file sizes. Often times they balloon by tens or even hundreds of GBs in a single update. For example, Call of Duty Modern Warfare’s update size is a source of constant frustration for gamers. With cloud gaming platforms, no longer will gamers have to worry about which GPU to buy or how to budget the GBs on their machine.
In a world where cloud gaming services are the primary way gamers play video games, any console or any other dedicated gaming machine becomes a quickly depreciating asset.
Later this year, Sony is launching a cheaper digital only PS5 along with a model with a disc slot; however, with only 825GB of storage (even with improved memory management), how long will it last before gamers need to expand their SSDs? With cloud gaming, users will have access to the “evergreen” console, one that will never become outdated or incapable.
Source: Sony
One of the biggest inflection points for cloud gaming will be the period 3 - 5 years from now, when publishers stop making new games for the current generation of consoles. Consumers will have the choice of either purchasing a new console to maintain their ability to play the latest games or switch to a cloud gaming service going forward. By that time, the value proposition of buying a new console with a limited amount of storage space for what will undoubtedly be very large games will likely dissolve. Remember the huge price tag on a PC capable of running Cyberpunk 2077 at the highest graphical settings? GeForce Now will be able to run the game on it’s hardware at similar settings at launch.
Portability
A big part of what makes game streaming so convenient is that it makes playing AAA games a much more portable experience. You are able to seamlessly transition from playing on a PC or laptop to your TV or a mobile device.
In both GeForce Now and Stadia, if you do not have a controller to use when playing on a mobile device, you’re able to play games with the on-screen touch controls, freeing the user of the need to buy any hardware.
Stadia’s Touch Controls in Destiny 2
Such portability also opens up the ability to play in non-traditional situations with ease. For example, using Stadia, I was able to start up and play Destiny 2 in a few seconds on SFO WiFi while waiting to catch a flight without experiencing any significant issues.
New Experiences
New gaming experiences are what I am personally most excited about when it comes to cloud gaming, and, given the research happening in this space, the possibilities are endless.
For example, Stadia has a feature called “State Share” which allows you to share your game’s state with another player.
Another useful Stadia feature is “Stream Connect” which allows players to view other players point of view via PiP windows on display in their own game stream.
In addition, Stadia will be integrated with YouTube enabling content creators who want to engage with their audience at a deeper level to invite watchers to their game sessions or provide input. Amazon’s cloud gaming platform could do something similar with Twitch and Microsoft is partnering with Facebook Gaming to integrate such functionality there as well.
As game streaming matures technically, another capability I am excited about being able to experience in the future is Cloud XR (VR & AR).
Facebook has been working on VR technology for the last ~6 years, following it’s purchase of Oculus in 2014 for $2.3 billion. In 2019, they launched the Oculus Quest, a portable VR headset offering 6 DoF much like the more expensive Oculus Rift S (PC required). One key limitation of portable VR has been the lack of local processing power on the headset required to provide truly immersive experiences. To mitigate this, Facebook created the Oculus Link, which tethers the Quest to a more powerful PC in order to play AAA VR games. However, one can argue that having to connect to a PC on occasion is not a truly “portable” experience.
Oculus Quest
Source: Oculus
Game streaming technology could make this specific impediment obsolete as VR / AR games and content could simply be streamed to the headset, relieving the consumer of the need to invest in expensive hardware to have an immersive experience.
While Cloud XR experiences are not quite ready for prime time, given their stringent latency requirements, there is already significant interest from industry players and telecommunications companies. Facebook seems to recognize this opportunity, and in late 2019 acquired PlayGiga, a company which claims to be working on such technology. Other entrants in this space are Nvidia, working on it’s own Cloud XR service, Shadow with Shadow VR, and Amazon’s AWS (working with NG Codec).
In the distant future, this technology, along with other advancements in materials science and BCI, may bring gaming experiences like the Oasis from Ready Player One within the realm of reality.
Source: Warner Bros.
Pitfalls
Although in the span of 10 to 15 years I completely expect cloud gaming to eclipse local gaming, there are several pitfalls that may make mass consumer adoption of cloud gaming take longer to realize than it otherwise would unencumbered.
Games. Games. Games.
No matter how impressive the capabilities of a platform are, if there is no compelling content there will be no user growth.
Playstation 4 Exclusive Titles
Source: Techpout
Gamers are still warming up to cloud gaming becoming the primary way they play; if their favorite games are not on cloud gaming platforms, the chance that they would make that switch, let alone attempt it at all, is low.
GeForce Now’s model allows you to play games you already own on Steam, so you still have ownership of the license and will be able to download the game locally to a PC or laptop. This approach has led to some legal issues for Nvidia, resulting in some publishers pulling their games from the service.
Stadia operates more like a traditional console platform from a business perspective in the sense that gamers can not transfer games bought on Stadia to another platform; however, Stadia does not yet have a strong set of AAA exclusives that show off all of the platform’s capabilities.
This particular problem falls under the rare case where throwing money at the problem is an actual solution. Giving developers a strong incentive to port existing games and upcoming releases to an emerging platform (at a high quality) is critical to solving the quintessential chicken and egg problem so many platforms face in their early days.
In light of this, services like XCloud and Playstation Now have an advantage over services like Stadia, GeForce Now, and others in the short term as Sony and Microsoft have already established relationships with nearly every game publisher and have development workflows that game devs are already familiar with.
Stadia Partners / Games
Source: Stadia
To get glimpse of what would await cloud platforms which fail to achieve ecosystem parity, one only needs to look back to the demise of the Wii U, arguably Nintendo’s greatest hardware blunder. The Wii U’s failure was due in part to the fact that it did not have support from many major third party studios due to it’s low user base. For many developers, using valuable time and resources to support a slow growing platform and low user count count was not worth it. For the Wii U, Nintendo failed not solve the chicken and egg problem.
“Console Wars”
Gaming culture, especially when it comes to platforms, is very tribalistic in nature. The online discourse around which platform is the best place to play between Playstation, Xbox, and PC becomes very heated at times, so much so that said discourse is commonly dubbed as the “Console Wars.” Personally, I remember passionately debating the minor differences between the Xbox 360 and PS3 with my friends in middle school (I was a huge PS3 fanboy back in the day).
For some gamers though, the platform they’ve invested in almost becomes an aspect of their identities. Thus, rising platforms, especially ones from companies which are unestablished in the space, may be seen as a threat to be met with a finickiness, defensiveness, and in some cases even hostility.
Source: South Park
You may be thinking: What does this dynamic have to do with cloud gaming? Isn’t this a completely tangent issue?
In the long term, as cloud gaming improves and picks up steam, I expect the asymmetrical rancor towards cloud gaming to subside. However, in the short term, the vitriol can lead to the damaging of fledgling platforms in the eyes of the masses. Word of mouth carries a lot of weight, and negative narratives surrounding new platforms have the potential to stunt their growth or lead to other weird side effects.
One approach to mitigate this effect might be to initially market the service as a supplement to a gamer’s existing platform of choice, rather than a replacement, especially as most console gamers have already bought into a platform for this current generation (2013 - 2020). Another approach would be to initially focus on casual gamers, mobile first gamers, former gamers, and others who have yet to make the leap to console or PC gaming in the current generation for various reasons.
Latency
Although latency is often the first thing that comes to mind when people think about the viability of cloud gaming, due to infrastructure improvements and some neat tricks, it is largely an already solved problem for the casual gamer who doesn’t care about the occasional blip (within reason).
However, an increasing portion of the gaming community now participates in E-sports, where having the best gear and lowest ping can make the difference between winning and losing.
Fortnite World Cup 2019
Source: Nick Statt, The Verge
In order to grab a foot hold in the rapidly growing E-sports industry, the latency of cloud gaming platforms will not only have to improve but match the average latency a gamer would expect locally. Having “ok” latency will not cut it for the competitive gamer who’s tournament wins depend on having blazing fast reaction speeds.
Another thought that comes to mind as I write this: Assuming cloud gaming platforms match or exceed local gaming in terms of speed sometime in the future, would potential features such as “negative latency” be considered cheating?
Industry Shift
Looking back at the history of video game consoles, it always astonishes me to see how many different companies were in the space in the late 80’s and early 90’s (who knew Apple made a console?). However, overtime, a combination of market forces and led to a consolidation of the console market into just three major players: Microsoft, Sony, and Nintendo.
Cloud gaming represents another paradigm shift in the gaming market that may lead to the formation of a new vanguard amongst the most popular gaming platforms amongst players. Of the big three that represent the current vanguard, the company most vulnerable to becoming irrelevant is Sony.
Assuming Google and Microsoft’s cloud gaming platforms become the default way to play for former console gamers, Sony will find itself in an incredibly difficult position. In such a scenario, Sony could attempt to ramp up it’s own cloud gaming platform, an option they seem to be pursuing (ironically in partnership with Microsoft). However, there will come a time where the services that Sony is able to offer simply will not be able to match that of Microsoft and Google who already have in place the necessary infrastructure and have seemingly unlimited resources to throw at their respective services.
Overtime, Sony may find itself in the same position that SEGA did at the advent of the Playstation 2, overextended and unable to pivot to a new hardware strategy due to constrained resources. SEGA, unable to compete in the console market any longer, pivoted to pure software sales on other platforms. If Sony chose a similar route, it has a bevy of amazing studios such that it could successfully operate as a high quality games publisher on many other platforms (or one, if they strike an exclusivity deal).
SEGA Dreamcast
Source: Evan-Amos - Own work, CC BY-SA 3.0
Despite the obvious setback, becoming less relevant in the world of AAA gaming hardware does not necessarily mean the end of a company’s gaming hardware ambitions if they can create value that gamers cannot find elsewhere.
In the last console upgrade cycle, in order to match the graphical fidelity of it’s Playstation and Xbox counterparts, Nintendo launched the Wii U a year before both the PS4 and Xbox One. It’s failure, which I touched upon earlier, knocked them out of the race as the best place to play third party games (especially AAA games) early. Nintendo was stuck in a rough spot and a pivot was necessary. Overtime, Nintendo’s strategy shifted back to one that places a high priority on cultivating first party IP even more so than before whilst creating unique experiences for their IP via hardware (much of what brought them success in the first place). Due to this shift, Nintendo has seen massive success in the niche it has built for itself (one competitors cant easily replicate). The Nintendo Switch, a Wii U successor, has been extremely popular ever since it’s release in 2017 and sales have skyrocketed recently during the early days of the Covid-19 crisis as everyone was sheltering in place.
Source: Chaun²
Sony, much like Nintendo, could work to cultivate the same level of enthusiasm around it’s first party IP in order to keep consumers interested in experiencing that IP on whatever hardware Sony has to offer.
Reflections
Writing this post and thinking about the history of gaming and where the industry is headed has been a breath of both fresh air and nostalgia. I am very enthusiastic about this space and all of the new experiences we will all be able to share as game streaming technology develops. Regardless of the qualms surrounding cloud gaming that exist today, what the history of how we consume media tells us is that cloud gaming is here to stay. Furthermore, in this moment, due to many innovations over the last decade, not only is cloud gaming here to stay, but it is finally ready to thrive.
Cheers,
Denalex Orakwue
I love to learn. As always, if you have a different perspective on this topic you’d like to share or have context on points I may have missed, please leave a comment below. If you enjoyed this post and want to read more of the Positron blog in the future, please subscribe!
Disclaimer: I work at Google as a software engineer (not on the Stadia team). All sources are publicly available and all opinions are my own.
Streaming has changed everything, and Castle APKSS brings that change to your fingertips. With instant access to a vast library of movies, TV shows, and more, Castle eliminates the hassle of downloads and delays. Whether you're into thrillers, rom-coms, or trending series, enjoy smooth, on-demand entertainment right from your device.
Explore the future of streaming now at castleeapp.com
https://worldestimating.com/
Like
Reply