THIS MATERIAL IS A MARKETING COMMUNICATION.
The Emergence of Cloud Gaming
As global internet and cloud computing infrastructure continues to improve, cloud gaming (or Gaming-as-a-Service) has emerged to become a new online gaming format. Traditionally, games run locally on a user's video game console, personal computer, or mobile device. Playing top-quality games usually requires dedicated hardware with superior computing power and high resolution. Cloud gaming, in contrast, leverages cloud servers to stream video games directly to users’ device, enabling them to game remotely from cloud.
At the Game Developers Conference in 2009, OnLive unveiled its first cloud gaming service. Later during 2012-2015, Sony acquired OnLive and its competitor Gaikai, and released its own cloud gaming platform PlayStation Now. In March 2019, Google released Google Stadia, which allows users to stream games on any device at 4k resolution and at a frame rate of 60 FPS (Frames Per Second). Currently, major online gaming players and GPU (Graphics Processing Unit) producers all have cloud gaming services offering a monthly subscription model. For example, Google Stadia Pro’s monthly subscription is priced at US$9.99/month.
Due to latency and technological hurdles, cloud gaming penetration has been quite gradual over the past years. However, we expect the 5G roll-out to help accelerate user adoption and drive continuous infrastructural improvement. According to Newzoo (Cloud Gaming Report 2020, published in Sep. 2020), cloud gaming is estimated to generate revenues of US$585mn by the end of 2020, with North America and Europe accounting for 39% and 29% of the total revenue, respectively. By 2023E, the cloud gaming market will be worth US$4.8bn but only ~2.5% of total global online gaming market size (Cloud Gaming Report 2020, published in Sep. 2020).
What does it mean for consumers?
In our view, cloud gaming expands the addressable user base, as it lowers the barriers for users to play high-quality games by removing the upfront needs to buy expensive devices (gaming computer price cloud range from US$400-2000, based on our channel checks), enables consumers to play on any screen connected to the internet, and provides a more diverse gaming portfolio at more affordable prices, under the subscription model, which in our view could potentially also increase paying user base and time spent.
What does this mean for the online gaming industry value chain?
Despite the fact that cloud gaming will continue to be a small niche within the online gaming industry, we believe that it has important implications for the online gaming industry value chain.
In our view, under the subscription model, cloud gaming platforms will continue to purchase high-quality games in order to increase user stickiness and attract new users; a trend observed by major video and music streaming platforms (e.g. Netflix and Spotify). As a result, game developers with strong R&D (Research & Development) capabilities will likely gain higher bargaining power and higher revenue share. This also in turn drives increasing focus on game quality.
In addition, we expect cloud gaming to serve as an incremental channel for publishers, helping them to tap into a broader user base. Game publishers could be more operationally-efficient as cloud gaming doesn’t require in-app downloads like mobile games, which means user acquisition becomes easier in social media, short-form video, livestreaming and other platforms, and cloud gaming platform link can be embedded naturally to those platforms.
Large public cloud providers are also well-positioned to benefit from emergence of cloud gaming, as they have the necessary footprint and technical capabilities to stream games to a global audience. They could potentially charge fees based on usage or revenue share with cloud gaming service platforms, assuming they are not running the services themselves.
March 02, 2021
Staying Ahead with Mirae Asset’s Latest Insights
Disclaimer & Information for Investors
No distribution, solicitation or advice: This document is provided for information and illustrative purposes and is intended for your use only. It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument. The information contained in this document has been provided as a general market commentary only and does not constitute any form of regulated financial advice, legal, tax or other regulated service.
The views and information discussed or referred in this document are as of the date of publication. Certain of the statements contained in this document are statements of future expectations and other forward-looking statements. Views, opinions and estimates may change without notice and are based on a number of assumptions which may or may not eventuate or prove to be accurate. Actual results, performance or events may differ materially from those in such statements. In addition, the opinions expressed may differ from those of other Mirae Asset Global Investments’ investment professionals.
Investment involves risk: Past performance is not indicative of future performance. It cannot be guaranteed that the performance of the Fund will generate a return and there may be circumstances where no return is generated or the amount invested is lost. It may not be suitable for persons unfamiliar with the underlying securities or who are unwilling or unable to bear the risk of loss and ownership of such investment. Before making any investment decision, investors should read the Prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the Fund and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice before making any investment.
Sources: Information and opinions presented in this document have been obtained or derived from sources which in the opinion of Mirae Asset Global Investments (“MAGI”) are reliable, but we make no representation as to their accuracy or completeness. We accept no liability for a loss arising from the use of this document.
Products, services and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries and/or distributors of MAGI as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Information for EU investors pursuant to Regulation (EU) 2019/1156: This document is a marketing communication and is intended for Professional Investors only. A Prospectus is available for the Mirae Asset Global Discovery Fund (the “Company”) a société d'investissement à capital variable (SICAV) domiciled in Luxembourg structured as an umbrella with a number of sub-funds. Key Investor Information Documents (“KIIDs”) are available for each share class of each of the sub-funds of the Company.
The Company’s Prospectus and the KIIDs can be obtained from www.am.miraeasset.eu/fund-literature/ . The Prospectus is available in English, French, German, and Danish, while the KIIDs are available in one of the official languages of each of the EU Member States into which each sub-fund has been notified for marketing under the Directive 2009/65/EC (the “UCITS Directive”). Please refer to the Prospectus and the KIID before making any final investment decisions.
A summary of investor rights is available in English from www.am.miraeasset.eu/investor-rights-summary/.
The sub-funds of the Company are currently notified for marketing into a number of EU Member States under the UCITS Directive. FundRock Management Company can terminate such notifications for any share class and/or sub-fund of the Company at any time using the process contained in Article 93a of the UCITS Directive.
Hong Kong: This document is intended for Hong Kong investors. Before making any investment decision to invest in the Fund, Investors should read the Fund’s Prospectus and the information for Hong Kong investors (of applicable) of the Fund for details and the risk factors. The individual and Mirae Asset Global Investments (Hong Kong) Limited may hold the individual securities mentioned. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Copyright 2023. All rights reserved. No part of this document may be reproduced in any form, or referred to in any other publication, without express written permission of Mirae Asset Global Investments (Hong Kong) Limited.