Cloud gaming market reaches $1.4 bil in 2021 with 23.7 mil paying users, Newzoo reports

Many were initially skeptical of the prospects offered by cloud gaming; the ability to stream the latest AAA games at their highest quality on any given hardware with just a solid Internet connection is a rhapsody in and of itself.

The gaming industry’s dabble in cloud technology was certainly packing huge potential, but with many failed and bug infested launches; skepticism grew, until now.

According to a report update by Amsterdam-based games and esports data company Newzoo, this year marks a particularly exciting milestone, as cloud gaming will pass the coveted billion-dollar mark for the first time, ending at $1.4 billion cloud gaming in revenues in 2021.

But even more growth is coming.

While many people have underlined the individual challenges of cloud gaming companies, a careful analysis of the overall market tells a different story. Continuous developments and innovation across the sector mean the cloud gaming market’s revenues and potential will continue to skyrocket.

The market is on track to exceed the five-billion-dollar mark in 2023 as technology and infrastructure continue to improve. To that end, cloud gaming’s serviceable obtainable market will hit just shy of 200 million this year.

The research by Newzoo comes in the form of a March update on their latest Global Cloud Gaming Report.

According to Newzoo, part of 2021’s massive jump in revenues is due to increased cloud gaming activity from companies big and small, as we expected from last year.

Among the updates found are Microsoft’s launch of xCloud as part of Xbox Game Pass Ultimate, Amazon and Facebook entering the market with their own services (Amazon Luna and Facebook Cloud Gaming respectively), Nvidia’s resolution of its early licensing mishaps regarding its GeForce NOW service, which currently supports 800 gaming titles.

In parallel, smaller, independent cloud gaming services are successfully targeting markets around the world, including emerging regions via partnerships with local telecom companies.

“The high frequency of new services—as well as the big feature improvements for existing ones—mean there will be 23.7 million paying cloud gaming users by the end of 2021. The cloud gaming landscape is always changing, and understanding these shifts requires a deep analysis,” the Newzoo March update highlighted.

As mentioned, the ecosystem is more complex than ever before. The below infographic gives a snapshot of the market at the time of writing:

COVID-19’s Impact on the Cloud Gaming Market

Another part of the revenue jump was the stay-at-home situation brought about by the pandemic, which has also contributed to increased consumer interest.

‘’With people spending more time at home due to the lockdowns, video games became a key source of entertainment and way to socialize,” Nabil Laredj, VP Business & Head of Licensing at Blacknut, a leading B2C cloud gaming provider, told Newzoo.

“When we compare the data between Q1 and Q2 2020, our D2C service saw a five-fold increase in session length and three times the number of games sessions,’’ Laredj continued. “Overall, the increased engagement trend was maintained all year, and Blacknut has seen its number of active users grow by eight times in 2020,” Laredj added.

The data here speaks for itself, and RemoteMyApp’s CEO, Andreas Hestbeck, reaffirmed the idea that more people at home translated to cloud gaming growth.

‘’Let me first emphasize that we hope anyone affected by this tragedy will manage to recover fast. Nonetheless, 2020 has been a year full of fantastic achievements for us, business-wise. Having so many people that were suddenly stuck at home was an opportunity of a lifetime for all companies offering entertainment services. RMA registered great spikes in interest and many new players entering both the Vortex.gg platform and the MagentaGaming service,” Hestbeck told Newzoo.

Hestbeck also noted that some of the growth was temporary, but the boost to cloud gaming’s awareness remained un-mistakeable.

‘’However, the effects wore off as markets reopened, although we did see a resurgence during the second wave. In general, the overall awareness of cloud gaming has been very positively affected by the lockdowns. We expect that this will lead cloud gaming to grow even faster in 2021 as a great number of people got to experience the power of the cloud while gaming in 2020,’’ he added in the report.

RemoteMyApp is a B2B cloud gaming solution and gaming content aggregator for businesses worldwide.

Speaking of cloud gaming’s future, Newzoo again reiterated that it’s unequivocally promising, even in their pessimistic revenue scenario. “While some of the bigger first-to-market services faced challenges, these growing pains are common and necessary in young, fast-moving markets like this one,” the games and esports data company said.

Simply put, cloud gaming is here to stay, and its importance and prominence will only grow.