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- The cloud gaming market is expected to grow significantly, reaching $40 billion by 2034.
- Analysts predict that Xbox is positioned to lead the cloud gaming, holding 40% of the market.
- Microsoft will face competition from Sony and NVIDIA, but its early start and extensive content library give it an edge.
Cloud gaming is set to grow exponentially over the next decade, with projections indicating it could become a $40 billion industry by 2034. A recent Bloomberg Intelligence report suggests that countries like India, where mobile gaming is already more popular than console gaming, will drive this growth.
According to analysts, Microsoft and Xbox are well-positioned to capitalize on this growing trend. Microsoft is a major player in the cloud gaming trend with its Xbox Cloud Gaming service, which is part of Xbox Game Pass Ultimate.
Why it matters: As better internet options become available, cloud gaming will become more attractive, providing a cost-effective alternative to owning a gaming console.
The global cloud gaming market, which was about $5.76 billion in 2023, is expected to grow exponentially. This growth is fueled by better cloud technology and more widespread internet access. Experts predict the market could hit $40 billion by 2034.
However, there are still some technical issues with cloud gaming, like latency and blurry visuals, especially for users far from data centers.
To address these problems, Microsoft is increasing its data center network, including a new facility in Hyderabad, India, to enhance performance in expanding markets.
Bloomberg Intelligence predicts that Microsoft will lead the cloud gaming market, capturing 40% of the market share, followed by Sony holding 15%.
Microsoft’s early entry, along with its large content library and strong data center network, gives it a big advantage. However, PlayStation and NVIDIA remain strong competitors.
The report also highlights that Microsoft is dealing with regulatory issues, especially with Apple’s app store rules. Although Apple says it supports cloud gaming, high fees and strict rules make it tough for Microsoft to operate profitably.
Therefore, Microsoft is focusing on a web-based version of Xbox Cloud Gaming, which currently only supports Fortnite due to legal disputes between Epic Games and Apple.
Moreover, Bloomberg expects Microsoft to offer cheaper, ad-supported options for Xbox Cloud Gaming by 2025. However, reports indicate that Microsoft is not planning to launch these ad-supported tiers anytime soon.
Reports also indicate that Microsoft might be planning a cloud-only Game Pass tier. With the cloud gaming market snowballing, Microsoft’s Xbox Cloud Gaming is well-positioned to lead the industry.
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