Cloud gaming is going to become a much larger component of the games sector, according to a recent report by IHS Markit. In 2018, consumers spent $387 million on cloud gaming services, and that number is expected to grow to $2.5 billion by 2023. The report places cloud gaming into two distinct services: cloud gaming content services, like Sony's PlayStation Now, where you pay a monthly fee to access games on its servers; and cloud gaming PC rental services, like Parsec, where you install your own games to a PC that you remotely connect to.
There have been smaller game streaming services around for a few years, but the first half of 2019 brought us some big announcements from some of the industry's most prominent companies. Google announced its streaming service, Stadia, at GDC back in March. Microsoft and Sony recently announced a potential partnership to develop better cloud and AI technologies, not to mention Microsoft has been developing its own streaming service, Project xCloud, for a while now. Tencent is also testing their own cloud gaming platform, Start.
Out of the 16 currently active cloud gaming and cloud gaming PC services, Sony's PlayStation Now is the most popular, capturing 36 percent of the total $387 million at the end of 2018. The Nintendo Switch came in second, and Yahoo! Japan's cloud gaming service came in third. Both of those services operate in partnership with Ubitus.
Out of the global market for cloud gaming, Japan spent the most with $178 million, largely aided by the availability of high-speed fixed and mobile broadband services and the release of the Nintendo Switch. The United States came in second, driven by PlayStation Now and several smaller start-ups, and France, known for its cloud-gaming start-ups like Blade, came in third.
While the report predicts that cloud gaming will inevitably disrupt the status quo of the games industry and the high-end gaming sector, it won't be a significant share of the games market—just two percent by 2023. It's unclear if the expansion of cloud gaming services will adversely affect the PC hardware market, as latency issues are still a major barrier to making cloud gaming a reliable option at this time.