The pandemic has led to the emergence of cloud-based gaming, which has shown robust growth in Southeast Asia. Cloud gaming allows users to stream high-end games to smartphones with fast network connectivity, eliminating the need for regular hardware upgrades. Using this technology, players can access gaming content without having to download it on to any device. Gaming on the cloud is similar to playing on a console or PC, although all of the processing and graphics are handled by the cloud rather than a console. Cloud gaming is similar to streaming movies on Netflix, but the user has more control.

Growth drivers

The cloud gaming industry has existed for almost a decade, but only recently has it gained traction. According to data by Statista, the number of mobile online gamers in Southeast Asia will rise to 250 million by the end of 2021 with revenue earnings from gaming amounting to $1.4 billion, making Indonesia, Malaysia, Thailand, Vietnam, Singapore, and the Philippines the six most significant countries for mobile gaming in Southeast Asia. This number is expected to cross the $5 billion mark by 2023.

Several factors contribute to this growth, including influencer partnerships, in-app advertising, innovations, and gaming partnerships. Furthermore, the increasing popularity of players in various sports and the increasing investment in internet infrastructure are the primary factors contributing to the market’s growth. The following are the major factors contributing to the industry’s growth.

Cloud adoption

The growing popularity of cloud infrastructure has resulted in an abundance of computing, storage, and communication resources that are dependable, cost-effective, and low maintenance. These cloud computing capabilities may be used for a variety of purposes, with gaming services being one of the fastest-growing cloud computing industries. There have been a number of platform launches in the market due to the emergence of cloud gaming platforms that allow users to stream their favourite video games instead of downloading them on smartphones or gaming consoles.

Smartphone adoption and internet accessibility

The growth of the cloud gaming market is attributed to the growing proliferation of affordable smartphones and internet penetration. According to App Annie’s State of Mobile in 2020 report, mobile is positioned as the most popular gaming platform in 2020, with over a 55 per cent market share and $100 billion in spending across all app stores. In addition, the report suggests that cloud gaming is set to become more prevalent across smartphones, forming part of the global mobile gaming market. Ericsson reports that Southeast Asia accounted for roughly one-third of the world’s total internet user population at the start of 2020. Since more than 50 million new users have come online for the first time in the region over the past year, these audiences will play an increasingly significant role in shaping the next phase of the internet’s growth. The expansion of the internet market in the region is expected to have a positive impact on the market growth of cloud-based gaming.

5G deployment

Increasing spending by governments in different countries, especially in developing economies, on the development of 5G infrastructure is expected to foster the growth of the cloud-based gaming market through 2025. It is expected that cloud gaming services will also increase in the market, taking advantage of the ubiquity of mobile phones and the speed of 5G connections to provide AAA quality gaming to smartphone users. 5G and unlimited data plans will also aid cloud gaming’s success, as most gamers prefer to play games on mobile devices today. By 2025, Ericsson predicts that the number of 5G mobile subscriptions in the Asia-Pacific region will reach 1,545 million. In Southeast Asia, it is anticipated that 5G will enhance user experience and drive the gaming market by providing 100 times faster performance than 4G networks.

Status

StarHub, a telecommunications company in Singapore, unveiled NVIDIA GeForce NOW, which is a first-of-its-kind cloud gaming service. GeForce NOW is a gaming cloud that allows players to access over 800 titles on any device without requiring any additional storage space or specialised equipment. All games played through this service will be processed by the cloud, via the 5G network of StarHub. The StarHub Cloud Gaming service is available to all subscribers regardless of subscription status. With NVIDIA GeForce NOW, users can experience games at 1080p with 60 frames per second on any device.

In Indonesia, Gamestream, a global B2B cloud gaming company, has announced its expansion and partnership with Telkom Indonesia, to provide cloud gaming services through GameQoo in Java, Bali, and Madura. GameQoo leverages Gamestream’s cloud technology and games portfolio and offers over 100 famous games from companies such as Disney, Codemasters, and Deep Silver. The service is being rolled out across Indonesia to over 9 million consumers and enables it to be played at bandwidth speeds as low as 4Mbps. With no widespread access to 5G gaming hardware and infrastructure, it is ideal to expand the gaming market with 4G infrastructure.

Lastly, Thailand’s largest mobile carrier, AIS, has teamed up with cloud gaming specialist Blacknut and Gameloft Distribution Solutions to offer a new cloud gaming service. The cloud gaming service, which is part of AIS’s new 5G offering provides clients access to over 400 games, with new titles added every month. In Thailand, cloud gaming may now be accessed on mobile devices with PC- and console-quality gameplay with decreased latency and considerably faster data rates thanks to the availability of 5G and the additional capacity it provides.

Market growth and outlook

The gaming industry in Southeast Asia is highly competitive, owing to the existence of several small and big firms in the market. Established gaming companies such as Microsoft, Sony, EA, and NVIDIA, as well as cloud gaming pioneers Vortex, LiquidSky, Parsec, and Shadow are aiming to compete with Google, Amazon, Alibaba Cloud, and Tencent. Moreover, the cloud gaming industry is highly concentrated, with only a few players obtaining a significant market share. To remain ahead of the competition and expand their reach, these companies use methods such as product innovation, service innovation, mergers, and acquisitions. Asia is a market that places a high priority on price. However, for cloud gaming to be feasible for providers, pricing points, lag and latency, processing, and infrastructure optimisation must all be addressed.

The advantage of many Asian nations is that they do not have preconceived notions about what gaming ought to be. The adoption of new-age technologies is going to be extremely fast because what gaming offers is pure, uninhibited, unhindered interactive entertainment.

Going forward, cloud gaming platforms are expected to bring a number of benefits to gamers, who will be able to play a wide range of high quality titles without the need for expensive hardware. With greater reach and monetisation options, developers, publishers, and platforms will experience more profits. As for other industries, the companies that own a large part of the value chain, including IP and infrastructure, will achieve the most success.

Cloud gaming holds a $3 billion potential for Asia, but it will need robust and dependable IT infrastructure, such as edge data centres, to make game streaming technology a reality.