US Cloud Gaming Market Stands to Generate Nearly $3 Billion in Annual Subscription Revenue

Consumer research explores consumer interest in cloud gaming and online gaming services

New research from Parks Associates finds the US cloud gaming market could generate nearly $3 billion in annual subscription revenue, as 30% of US broadband households currently express interest in this service. The research, in Cloud Gaming Demand and Preferences, reports 74% of US broadband households play video games for at least one hour per week. Gamers play for an average of 22 hours per week, a number skewed towards heavy gamers, and PC gaming shows the biggest gains as a result of COVID-19 pandemic.

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“There is a renewed interest in offering cloud gaming services that replicate Netflix’s value proposition by allowing consumers to stream games over the internet, across multiple platforms, and without having to download files or use local processing power,” said Kristen Hanich, Senior Analyst, Parks Associates. “We estimate, based on consumer interest in these services, the US cloud gaming market stands to generate nearly $3 billion in annual subscription revenue, with the opportunity to generate more revenue via service stacking and add-on sales, provided these offerings are designed and targeted correctly.”

Parks Associates finds multiplatform gamers are the key consumer segment to target for initial rollouts. The research also notes the average number of hours played per week has increased since the COVID-19 outbreak. PC gaming in particular saw a large increase in the number of hours played weekly, while gaming consoles were the only platform to show a decline in usage among heads of household from Q3 2019 to Q1 2020.

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“Cloud gaming services enable providers to leverage this increased gaming on connected devices, including smart TVs and streaming media players, where gaming is often secondary to their main value proposition,” Hanich said. “The continued improvement of internet networks and the cloud, as well as the rollout of 5G with its promises of improved latency, enables companies to offer high-performance cloud gaming solutions across multiple platforms without taxing their limited processing power.”

Cloud Gaming’s Demand and Preferences examines consumer interest the emerging cloud gaming market, investigating which business models will be most likely to succeed. It also provides an overview of the gaming market in the US – including mobile, PC, console, and streaming media player and smart TV gamers – and identifies key consumer groups that cloud gaming services must target in order to gain adoption.

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