Silicon Valley suddenly seems to take video games very seriously.
Microsoft, Apple, Google and Snap have revealed new gaming services in recent weeks. Now that the acceleration of the growth of the last decade led by smartphones begins to lose steam, the industry faces the greatest period of renewal and experimentation in years.
Microsoft and Google are developing “game in the cloud” services, where games are played over the network instead of being downloaded or booted from a disk. Analysts have compared Netflix’s shift from DVD rental to streaming movies, as both companies can leverage their current potential in the cloud to deliver games with reliability guarantees.
“What has become clear is that the cloud is the new competitive platform,” explains Piers Harding-Rolls, gaming analyst at market research firm IHS Markit. “The key differentiating elements are actually infrastructure and content”.
In addition to technology, new business models for games have emerged. The latest releases for consoles such as Sony’s PlayStation or Microsoft’s Xbox can cost up to $ 60 a game. But with the arrival of the iPhone App Store, the games started to become much more affordable. Over time, even 99 cents games like Angry Birds had trouble competing with free apps like Candy Crush Saga or Clash of Clans. Instead of charging in advance, free games assume that a small percentage of players will pay for in-game items such as extra lives or new costumes for their characters. The trend has made it difficult for developers to find paying customers for games that do not fit the micropayment model within the application.
Apple’s upcoming Arcade service raises a third way between free games and paid titles, offering an unlimited Netflix-style subscription for a package of more than 100 titles.
Snapchat’s parent, Snap, is exploring another, new model: social games. Games became one of the most popular activities on Facebook. But when social networks made the leap to the mobile segment, developers such as the creator of FarmVille, Zynga, had difficulty finding a space within the Facebook smartphone app. Snap hopes to revitalize the category with games that can be played among friends within its messaging application – similar to the “mini-games” played by hundreds of millions of users of Tencent’s WeChat service.
With so many companies competing for audiences and game developers, some analysts anticipate an increase in mergers and acquisitions activity in the sector.
“[The game in the cloud] is not going to change things overnight, but if Google suddenly launches interesting content or acquires a large publisher, we start talking about something else”, says Harding-Rolls.
Some entrepreneurs hope that the revolution can help new players to compete with the big names of Silicon Valley for the screens of the players. Discord, a messaging app specializing in games, and Epic, the creator of Fortnite, are just two of the companies that have launched new gaming applications stores.
“It’s beginning to look like how technology is transforming the way people play,” explains Andy Kleiman, founder of Wonder, a startup that works in a multi-platform gaming center. “There are other means to obtain income and growth that have not yet been exploited, which opens up the opportunity for new companies”.
Also published on Medium.