Microsoft, Google, Amazon and more are battling for the top spot as the “Netflix of gaming.” With $200 billion on the line, “cloud computing” is more profitable than ever.
Viewers watched 9.36 billion hours of video games on the streaming website Twitch last year, according to production company StreamElements. Wedbush analyst Michael Pachter estimates Twitch brought in over $400 million in revenue in 2018, from e-sport streaming alone — that’s a big industry. And Twitch has only been around since 2011.
Amazon bought Twitch for $970 million in 2014, out-bidding YouTube owner Google. Gaming is following music, movies, and television down the path of mobile consumption; now no longer requiring an expensive console or headset, all you need is a smartphone.
According to market researcher Newzoo, the video game industry as a whole is expected to generate $152 billion worldwide this year. That’s more than twice the home movie market, and eight times more than the global music market.
Of course, every big tech company and video game maker wants in on streaming revenue. They’ve all quickly had to get familiar with “cloud computing,” which off-loads gaming servers so users can access huge amounts of data on-demand. Cloud computing keeps game visuals sharp and loading speeds fast, key elements to reaching the giant gaming market without requiring expensive PCs or consoles.
Newzoo predicts the global gaming industry could reach almost $200 billion in annual sales by 2022, so it’s no wonder big shots like Microsoft, Google, Amazon, Apple, Walmart, and Verizon are battling to be the Netflix of gaming. All are working on expanding their cloud-gaming and game-streaming services. They have the potential to make a serious profit.
Cloud-computing growth is one of the main reasons Microsoft’s market capitalization topped $1 trillion this year. Its “intelligent cloud” unit brings in as much revenue in a quarter as Microsoft’s gaming systems generate in a year. Now the two departments are combining forces to bring gaming to the next level — the cloud.
But even gaming’s getting outpaced. With the help of Epic Games’ Fortnite and its 250 million registered players, streaming service Twitch is showing that people like watching video games just as much as they like playing them. Remember, that’s 9.36 billion hours of video games viewed last year alone — and Amazon’s in charge. A former Microsoft executive told Fortune: “Amazon has Microsoft on a treadmill.”
SuperData analyst Van Dreunen predicts cloud-computing moves by Amazon, Microsoft, and Google could take until 2025 to significantly affect the gaming industry, but that’s not too far off. New tech, from Twitch to Uber, makes billions every year — and no one wants to miss out on the potential profits.