“Are you getting on tonight?”
This phrase has become all too familiar to casual and competitive gamers across the globe.
Friends have been spending more time together than ever before. But instead of meeting at houses or bars, they are gathering online to play video games.
The social aspect of gaming has shined during the COVID-19 pandemic and helped push video game sales to a record level last quarter.
Gaming demand will continue to increase. But the way in which consumers purchase games will change dramatically over the coming decade.
Consumers Crave Convenience
As of now, video games are typically purchased in either a digital or physical format and then downloaded to a game console or computer.
New games typically cost $60 to $70 each and require a tedious download process. It is not uncommon for download times to span over 24 hours for large games.
Many gamers purchase each new game in a franchise when released to stay current and continue gaming with friends. This has led to millennials spending an average of $112 per month on gaming content.
As you can see, the current process of purchasing and consuming games is costly and inconvenient.
Consumers crave convenience. This is opening the door for a new cloud gaming model, Gaming as a Service (GaaS).
A New Cloud Gaming Model
Similar to the way Netflix killed DVDs, GaaS will change the way video games are consumed.
GaaS enables gamers to access different games on demand with a subscription. Some GaaS models still require game downloads, but streaming games without downloading will soon be the industry norm.
By utilizing GaaS from the cloud, consumers can skip the extended download times while saving money on game purchases.
This is why the value of the cloud gaming market is expected to increase 51 times by 2024:
(Source: Big Ideas 2020 — Ark Invest)
The idea of purchasing a cloud gaming subscription is gaining traction. Forty-four percent of gamers reported they would subscribe to a gaming service.
As GaaS becomes more mainstream, I expect this number to increase exponentially due to the social nature of gaming.
Companies with flexible as-a-service business models have been among the top performers over the past few decades.
The streaming giant Netflix Inc. (Nasdaq: NFLX) is valued at $1,300 per subscriber, and its stock has gained 44,000% since 2002.
A Huge Opportunity for Investors
The number of active video gamers globally is already at 2.7 billion and will continue growing:
(Source: Statista)
If each gamer spent $20 a month on a gaming subscription, the GaaS market would be worth $650 billion.
The emergence of Gaming as a Service is an opportunity for investors to make huge gains over the coming decade.
Regards,
Analyst, Automatic Fortunes
