Amazon and Netflix have potential to enter video games though streaming

11 October 2019 Consulting.us

Amazon and Netflix garnered top marks for consideration among potential video game streaming customers, according to a recent report from Escalent. The Livonia, Michigan–based human behaviour and analytics consultancy surveyed 972 US adults to examine the future of video game streaming.

The global video game market is expected to grow from $137.9 billion in 2018 to more than $180.1 billion in 2021. Gaming on mobile phones and tablets expanded the industry from its console-based roots in the past 15 years, and streaming is set to expand the audience for gaming even further.

Streaming technology allows people to play modern video games if they have a rock-solid internet connection, a browser/app, and a controller – eliminating the need for hardware like a Nintendo Switch or PS4, but consequently requiring a fast internet connection and no data cap. Rural Canadians, as such, need not apply.

Google’s Stadia game streaming service aims to be a successful “Netflix of gaming,” and is set to launch in the US, UK, Europe, and Canada in November.

The brands players are open to consider for video game streaming

Though 34% of survey participants in the Escalent study viewed game streaming as a novel concept, now defunct OnLive offered video game streaming as early as 2010. And though latency issues and other barriers may prove a difficult obstacle, Google’s vast infrastructure is likely better suited to the task.

Overall, 26% of consumers said they are very or extremely interested in streaming video games.

According to Escalent, streaming is being pushed to market because it allows for new competitors to enter the lucrative arena, while also allowing traditional gaming firms to build healthy subscriber-based revenue streams.

The significant obstacles to widespread adoption include latency, a lack of reliable internet connection, high server costs, bandwidth caps, and uncertainty around pricing models.

The survey found that consumers are open to a variety of brands – and notably, the big video content streamers. The top brands were Amazon (28%), Netflix (25%), Sony/Playstation (25%), and Microsoft/Xbox (22%). (The survey was conducted before Google Stadia was announced).

The favorability shown towards Amazon and Netflix show that there is great potential to shift spending away from video game console incumbents like Sony, Microsoft, and Nintendo. Amazon, Netflix, and Google are good at the nitty-gritty of streaming; Amazon has its Prime Video service as well as Twitch, while Google will look to integrate Stadia with Youtube.

Monthly streaming price evaluation

But Sony, Microsoft, and Nintendo have their stellar first party titles – which continue to bring gamers to their consoles. They also have long and strong relationships with third-party publishers. The Big Three are also piloting their own streaming services, with Playstation Now having functioned for several years now.

Streaming competitors, as such, will need to build deep third-party relationships, while potentially setting out to make their own first-party titles. This will likely necessitate buying out some capable developers – not a cheap endeavor.

Developers and publishers, meanwhile, are also looking to create their own distribution and subscription platforms – just like how the video streaming market is fragmenting into Disney, NBC, and other networks and content creators pushing their own service platforms. Rockstar Games and Epic Games are looking to extract more money from the sale of their games than they get from Steam (itself the first-mover distribution platform of Valve, which mostly stopped making games after it realized it could make more money from selling other publisher’s games). The new publisher store platforms may also decide to move toward a streaming service as well.

As for pricing, the Escalent survey found that approximately $10 per month was the sweet spot for game streaming services, with mainstream gamers tagging $15 as too expensive. Hewing close to the pricing of premium Netflix or Hulu, therefore, seems to be the ticket.


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