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Cloud Gaming's Crowded Race

Cloud gaming's competitive landscape, media rights in China

Cloud Gaming: A Crowded Race

In short, there’s so much more to cloud gaming than just Google Stadia. While the tech giant’s entrance into cloud gaming is certainly significant, it’s not the only major player at the table. Below I briefly touch on the history of cloud gaming, the other players in the market today, and where we think we are headed:

History of Cloud Gaming (brief): since as early as the year 2000, there has been interest in the potential of cloud gaming when G-Cluster (a Finnish/Japanese startup now owned by SoftBank) demonstrated cloud gaming technology at E3. Growth and activity in the space picked up meaningfully at the beginning of this decade as OnLive and SFR Games launched in 2010 and Gaikai and Orange France in 2011. Sony quickly acquired Gaikai in 2012 to launch PlayStation Now in 2014 (it later acquired OnLive’s patents in 2015).

Fast forwarding to 2019, new services and companies have continued to pop up and we now have Shadow, GeForce Now, Loudplay, EA Project Atlas, Microsoft xCloud, Instant Play, Jump, LiquidSky, Parsec, Cortex Cloud Gaming, PlayGiga and Google Stadia as well. An interesting note is that G-Cluster tech (from their 2000 debut) powers a number of cloud gaming services provided by non-core companies such as the telecoms out of France and individual publishers.

Infrastructure Issues: the main issues with cloud gaming are the need for 1) fast and reliable internet and 2) enabling scalability on the cloud. Recently, a number of technological advances are opening a window of viability: 1) 5G technology, 2) proliferation of the cloud and edge computing, and 3) techniques for CPU/GPU resource sharing. Cloud gaming is a huge opportunity and the time feels right; hence why so many players are jumping into the game (literally and figuratively).

What’s Coming: thinking about the future, I’d like to draw a parallel to the content streaming space. Netflix proved content streaming’s viability before other players figured out the opportunity. Now that it’s proven, the “streaming wars” are fully underway between Netflix, HBO, Hulu, and Disney+.

In cloud gaming, we expect a similar aggressive battle to take place yet at its onset vs down the road. Cloud gaming is accelerating as this category hits an inflection point between gaming adoption + technological capability. Cloud gaming companies today don’t have the luxury that Netflix did of being one of the only players in the market. They are all launching in an extremely competitive landscape at roughly the same time.

Prediction: one prediction I’ll throw out there is that traditional content streaming services (Netflix, HBO, Disney+), in an effort to differentiate themselves and provide added value, will horizontally expand into cloud gaming services (i.e. multiplayer games on Netflix).

The transition from one-way-media (OTT) to two-way media (gaming) is well underway. Let’s see how the incumbents react to a userbase that is shifting towards more interactive entertainment: video gaming.

Media Rights in China: League of Legends (Riot Games)

This week, Bilibili (Chinese streaming platform) paid $113M (~$37.6M/yr) for the exclusive broadcast rights in China for the next 3 years of the League of Legends World Championship (note: just the championship). Bilibili also owns the Chinese League of Legends team Bilibili Gaming and Overwatch League franchise Hangzhou Spark.

In addition, Huya, another Chinese streaming platform, just signed an agreement with Riot Games to broadcast the League of Legends Korea (LCK) for the next 3 years in China. These two deals show how valuable the Chinese audience is to streaming platforms.

These recent deals are helpful as they give us further data points on how the market is choosing to price esports media rights. The buyers of esports media rights now include Twitch (Overwatch), Bilibili (LoL Finals in China), and Huya (LCK in China): all are streaming platforms.

Given the popularity of LoL globally, it’s easy to see a global media rights deal being worth well over $100M, as we alluded to in our recent piece on “Esports Media Rights: Driven by Ad-Revenue”.

Cloud Gaming's Crowded Race

Cloud gaming's competitive landscape, media rights in China

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