What is cloud gaming and will the death of the Microsoft Activision Blizzard deal affect it?

Xbox's cloud gaming service is at the center of a dispute between Microsoft and some regulators, who believe the tech giant may be limiting choice for consumers.  (xbox)

Xbox’s cloud gaming service is at the center of a dispute between Microsoft and some regulators, who believe the tech giant may be limiting choice for consumers. (xbox)

Earlier this week, the UK Competition and Markets Authority (CMA) blocked Microsoft’s proposed acquisition of popular game developer Activision Blizzard over concerns the tech giant could “stifle growth” in the burgeoning market. of cloud gaming. This follows a similar complaint filed by the US Federal Trade Commission in December.

Microsoft criticized the decision, saying the CMA was sending a “message” that the UK is not open for business.

It seems like the one thing regulators, Microsoft, and Activision Blizzard can all agree on is that cloud gaming is a big deal. So what is it and why should you care?

What is cloud gaming?

Cloud gaming refers to services that allow users to stream video games over the internet directly to mobile devices, smart TVs and laptops, meaning people can continue playing on the go.

The technology also eliminates the need for expensive game consoles or a high-spec PC, as video games work regardless of your device, as long as you have a good enough internet connection.

How popular is it?

Microsoft already owns about 60-70% of the cloud gaming market, according to the CMA.  (Microsoft)

Microsoft already owns about 60-70% of the cloud gaming market, according to the CMA. (Microsoft)

Right now, the biggest cloud gaming services out there are Microsoft’s Xbox Cloud Gaming (£10.99 a month), Nvidia’s GeForce Now (free but games must be purchased individually), Sony’s Playstation Plus (from £49. 99 a year) and Amazon’s Luna (£8.99 a month). All these services exist only after the pandemic.

According to research firm S&P Global, the global cloud gaming market is expected to grow from $2.73bn (£2.15bn) in 2022 to over $13bn by 2026, but today it’s hard to say exactly how many people are using the cloud gaming services.

What we do know is that Microsoft says it has 20 million users on its Xbox Cloud Gaming service as of November 2022, which is bundled with its Xbox Game Pass Ultimate monthly subscription service.

But other cloud gaming providers have yet to disclose user data, while Google shut down its Google Stadia cloud gaming service in January, just three years after it launched in November 2019.

The CMA gives us a clue: In its ruling on the deal between Microsoft and Activision Blizzard, the watchdog said that Microsoft already “accounts for about 60-70% of global cloud gaming services.”

Benefits of cloud gaming

The benefit of cloud gaming is that it allows many more people to enjoy instant gaming, whether it be casual users, who only have low-spec consumer laptops, or consumers who can’t afford to upgrade to the latest gaming consoles or next-generation graphics cards for their PCs to run video games.

All you need is a working internet connection and you can access your account from a web browser on a computer or open the app on your mobile phone or tablet.

Many video games are also very expensive – Star Wars Jedi: Survivor, for example, which is out today, is priced at a hefty £60, so a monthly subscription may seem more affordable – although there’s no telling when the game will be available to be played. streamed to Xbox or any other service.

The technology also allows users to have a Netflix-style cross-platform experience and play their favorite video games on the go and then pick them up right where they left off at home on their PC or gaming console, basically what it feels like while the game. games like Fortnite, Minecraft, Genshin Impact, Call of Duty, Among Us and Apex Legends.

Cons of cloud gaming

Take a look at Google and you will see that one of the most searched phrases is “Why is cloud gaming so slow?”

One of the biggest criticisms of cloud gaming is that games lag, freeze or freeze at critical moments, or that the resolution seems very low because the graphics have to be compressed to be streamed to your device.

Gamers vary in their opinions about different cloud gaming providers: some claim that there is no lag in the Xbox Cloud Gaming service, so they are able to execute split-second moves and respond to enemies on screen, while others, like it Standard‘S Barry Collins, found the gameplay experience boring and frustrating, with repeated stuttering and screen redraws.

On the other hand, the reception of Nvidia’s new GeForce Now service has been very complementary: reviewers say that high-spec video games run in an instant on low-end laptops and still deliver very high frame rates, as well as quick response.

Geforce Now (Nvidia)

Geforce Now (Nvidia)

However, the fact remains that the internet infrastructure we have today is still not powerful enough overall to support a really great cloud gaming experience.

Much of the tech industry’s hopes for graphics-intensive cross-platform gaming experiences have been pinned on the rise and proliferation of 5G, which should eventually make our mobile Internet experiences instantaneous, reliable, and far more powerful than they are today. .

Sadly, we’re not there yet, Nick Maynard, head of research at UK-based Juniper Research, tells the Standard.

“Diverse gamers, such as mobile gamers or those without the latest hardware, will be able to access high-end games, creating a more open gaming environment,” he says.

Maynard added, “However, we will need to see further rollouts of 5G and superfast broadband to enable a decent level of service.”

S&P Global agrees. Research analyst Neil Barbour estimates that if you took one “heavy gamer” (someone who plays video games about 42 hours a month) and they spent most of their time streaming games from the cloud, by 2026 they would use six times more data than they do today and there is a serious concern that our current broadband providers would not be able to handle this level of web traffic.

Will the CMA’s decision seriously affect the future of cloud gaming?

Microsoft and Activision Blizzard plan to appeal the CMA's decision.  (Koshiro K/Alamy/PA)

Microsoft and Activision Blizzard plan to appeal the CMA’s decision. (Koshiro K/Alamy/PA)

Again, opinion is divided on this one.

Although Microsoft says it was planning to make Activision Blizzard’s huge game catalog available on 150 million more devices than before and promised not to stop other service providers from providing popular titles like Call of Duty for at least 10 years, the fact remains that Microsoft controls the largest share of the market.

This means that we could end up with a situation where users feel pressured to choose Xbox over other providers due to lack of choice. And as we’ve learned with content streaming services, most people can’t afford to subscribe to all of them.

“It could however have a big impact on the market – consolidation has been a constant trend in the gaming industry for some time, so a measure to slow it down could have a very big impact,” says Barbour.

“Cloud services must have the best titles – games are led by big names, with major publications like Call of Duty and FIFA being big news driving the market forward… which is why the Activision/Microsoft deal is been blocked (as would Microsoft have Call of Duty).

“Just because people will be able to play the latest console game on a phone doesn’t mean it offers the best experience, in terms of screen size, control interface, etc. However, we will see more content available to a wider audience, the more choice and even more popularity of subscription services.

But tech journalists aren’t so sure. Sean Hollister, senior editor at The Verge, thinks “cloud gaming still sucks” – an opinion I happen to share.

After all, growth in the global cloud market is slowing, US research firm Synergy reported in February, which means that if you want to grow your business in the cloud, you need to get many more people using the cloud for a new purpose. I’m not already using it at the moment.

Hollister says none of the other tech giants dealing with cloud gaming fare quite as well.

He explained: “Microsoft was punished because Google Stadia completely failed, because Amazon Luna didn’t go anywhere fast, because Sony got distracted, because Nvidia can’t stream your purchased games without negotiating with every publisher and developer. under the sun.

With so little real-world competition, Microsoft’s xCloud looks dominant, particularly when you consider that Microsoft bundles it into every Xbox Game Pass Ultimate subscription, whose subscribers can, for all we know, try xCloud once and never again.

“Microsoft is a big fish in a tiny pond. And paradoxically, the UK’s decision could help keep it that way.”

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