ABI Research reckons that COVID-19, which has sparked school closures, social distancing and in-home sheltering, may well lead to a "drastic increase" in online services and content consumption. In turn, says the research outfit, this could bolster cloud gaming revenue to as much as US$4.5 billion by 2024.
"The impact of the COVID-19 has and will continue to take a toll on the global economy until it is contained," says Michael Inouye, principal analyst at ABI Research. "But not all markets are equally impacted, and the cloud services and content markets are a prime example."
There are some caveats. Growth in this sector, pointed out ABI Research, very much depends on the ability of cloud gaming services to support a higher load of concurrent users and provide a good first impression to those looking for additional sources of entertainment while stuck at home.
"For non-gaming households starved for new content and entertainment, subscribing to a cloud gaming service is a good option to add a gaming platform without making significant investments into new gaming hardware," says Inouye.
Reliable broadband connectivity seems a must, then, along with consistent low-latency connections. So far at least, broadband networks appear to be coping well. "We are not currently seeing any major congestion problems," claims Dan Sjöbolm, the chairman of BEREC, a club of European telecom regulators. US operators have voiced similar confidence. (See Broadband is not immune to COVID-19 and US wireless networks are holding up to COVID-19.)
But broadband is not the only ingredient for online gaming success. ABI Research indicates that the sector needs to up its game [Ed's note: Groan!] in terms of content and packaging of services.
Potential manufacturing shortages is another worrying obstacle for growth in the short term, although ABI Research notes that future launches of next-gen consoles are still planned for the end of 2020.
"Problems with this launch, however, would certainly reduce the revenue expectations for retail and the console gaming market at large, but could offer a window for nascent cloud gaming services to generate additional exposure," argues Inouye. "Similarly, a protracted struggle to contain the virus will make it increasingly difficult for studios and content producers to produce and adhere to release schedules, disrupting the flow of content and potentially causing issues with services."
Longer-term challenges for pay-TV operators, says Inouye – which include a growing number of telcos – is to "better support customers who are accustomed to adding and dropping OTT services freely." Another strategic priority for pay-TV operators, he says, should be to better place themselves as the "future aggregation point for media and entertainment services."
Over the next two years, approximately 60% of service providers (both large and small) will adopt virtualization on a wide scale across their networks, according to the latest survey report from Ovum. Why are providers making these moves? Is there an easy way to start?
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