Tag Archives: online gaming

Cloud Gaming

In September, Google announced it will be shutting down its game platform Stadia on January 18. Google will be making a full refund to anybody who bought Stadia hardware or bought gaming content. The announcement is reported to be a shock to the online gaming industry because it calls into question the business model of selling gaming through monthly subscriptions.

Gaming is a huge business. In 2021, gaming generated $214 billion in revenues worldwide. That represents over 6% of all spending on entertainment. Gaming market experts are predicting that this will grow to over 10% during this decade.

The pandemic triggered a growth spurt in gaming, with revenues almost tripling since 2019. During that time, there was also a big change in the dynamics of the industry, where many games are offered for free. Many game makers  are willing to forego the upfront fees for purchasing a game, which is a barrier to entry for consumers, and instead are hoping to get tens of millions of users by giving free access to games. Free games get monetized by microtransactions within the games to buy in-game goods and services. The biggest example is Fortnite, which is free to play and yet generates several billion dollars per year in revenue from players. Currently, almost all mobile games and six of the ten top PC games are free. The console game companies have stuck with the traditional paid model.

Before the pandemic, some large tech companies like Apple, Google, Microsoft, NVIDIA, and Tencent created online gaming platforms where customers could get access to libraries of games with a monthly subscription. The online platforms were chasing several groups of gamers. First, online games freed players from an expensive PC or console, and gamers could play with a handheld device anywhere they could find fast broadband. Second, the online platform libraries were meant to attract casual gamers who aren’t focused on playing only a few games. The vast majority of gaming revenue comes from casual players.

But online game platforms like Google got mixed reviews. The biggest complaint was that gaming through handhelds could be sluggish – a death sentence for gaming. This speaks more about the quality of broadband connections than it does the gaming platforms. Serious gamers using PCS or consoles invest in buying the fastest broadband available. But people willing to game on handheld devices from anywhere were subject to the big variability in broadband connections away from home. I recently talked to a librarian whose library had banned online gaming because it killed the broadband connections of other library patrons.

Google obviously didn’t achieve the goals it had set for the gaming platform and didn’t get the number of subscriptions it was hoping for. Online reviews of the Google platform are mixed, with some users loving the service while others pan it. Some users said the online libraries of games aren’t dynamic, with the companies going for a large library instead of a great library.

Google’s demise might spell a change in the idea of subscription gaming – it might not be what enough people want. But even if these online services die or aren’t very popular, there is still going to be a huge demand on broadband networks to carry gaming content. Both PC and console platforms invite gamers to play online with friends by setting up VPNs. Many of the popular free games allow for multiple players, in some cases millions at a time.

Gaming has spread to all age groups in the US. 24% of all gamers in 2022 are under 28, while 26% are between 18 and 34. But the other 40% of gamers are over 34, with 6% of gamers over 65.

Ten years ago, we didn’t even mention gaming when talking about uses of broadband. But for many households, gaming has become the predominant driver of bandwidth demand. Interestingly, people don’t just play games, and millions watch others play games on Twitch and YouTube. While the Google gaming platform didn’t make it, I think we can expect gaming to be a significant driver of broadband usage.

Gaming and Broadband Demand

Broadband usage has spiked across the US this year as students and employees suddenly found themselves working from home and needing broadband to connect to school and work servers. But there is another quickly growing demand for broadband coming from gaming.

We’ve had online gaming of some sort over the last decade, but gaming has not been data-intensive activity for ISPs. Until recently, the brains for gaming has been provided by special gaming computers or game boxes run locally by each gamer. These devices and the game software supplied the intensive video and sound experience and the Internet was only used to exchange game commands between gamers. Command files are not large and contain the same information that is exchanged between a game controller and a gaming computer. In the past, gamers would exchange the command files across the Internet, and local software would interpret and activate the commends being exchanged.

But the nature of online gaming is changing rapidly. Already, before the pandemic, game platforms had been migrating online. Game companies are now running the core software for games in a data center and not on local PCs or game consoles. The bandwidth path required between the data center core and a gamer is much larger than the command files that used to be exchanged since the data path now carries the full video and music signals as well as 2-way communications between gamers.

There is a big benefit of online gaming for gamers, assuming they have enough bandwidth to participate. Putting the gaming brains in a data center reduces the latency, meaning that game commands can be activated more quickly. Latency is signal delay, and the majority of the delay in any internet transmission happens inside the wires and electronics of the local ISP network. With online gaming, a signal between a gamer only has to cross the gamer’s local ISP network. Before online gaming, that signal had to pass through the local ISP network of both gamers.

There are advantages for gaming companies to move online. They can release a new title instantly to the whole country. Game companies don’t have to manufacture and distribute copies of games. Games can now be sold to gamers who can’t afford the expensive game boxes or computers. Gamers benefit because gaming can now be played on any device and a gamer isn’t forced into buying an expensive gaming computer and then only playing in that one location. Game companies can now sell a gaming experience that can be played from anywhere, not just sitting at a gamer’s computer.

A gaming stream is far more demanding on the network than a video stream from Netflix. Netflix feeds out the video signal in advance of what a viewer is watching, and the local TV or PC stores video content for the next few minutes of viewing. This was a brilliant move by video streamers because streaming ahead of where what viewers are watching largely eliminated the delays and pixelation of video streams that were common when Netflix was new. By streaming in advance of what a viewer is watching, Netflix has time to resend any missed packets so that the video viewing experience has ideal quality by the time a viewer catches up to the stream.

Gaming doesn’t have this same luxury because gaming is played in real time. The gamers at both ends of a game need to experience the game at the same time. This greatly changes the demand on the broadband network. Online gaming means a simultaneous stream being sent from a data center to both gamers, and it’s vital that both gamers receive the signal at the same time. Gaming requires a higher quality of download path than Netflix because there isn’t time to resend missed data packets. A gamer needs a quality downstream path to receive a quality video transmission in real-time.

Gaming adds a second big demand in that latency becomes critical. A player that receives signal just a little faster than an opponent has an advantage. A friend of mine has symmetrical gigabit Verizon FiOS fiber broadband at his home which is capable of delivering the best possible gaming data stream. Yet his son is driving his mother crazy by running category 6 cables between the gaming display and the FiOS modem. He sears that bypassing the home WiFi lowers the latency and gives him an edge over other gamers. From a gamer perspective, network latency is becoming possibly more important than download speed. A gamer on fiber has an automatic advantage over a gamer on a cable company network.

At the same time as the gaming experience has gotten more demanding for network operators the volume of gaming has exploded during the pandemic as people stuck at home have turned to gaming. All of the major game companies are reporting record earnings. The NPD Group that tracks the gaming industry reports that spending on gaming was up 30% in the second quarter of this year compared to 2019.

ISPs are already well aware of gamers who are the harshest critics of broadband network performance. Gamers understand that little network glitches, hiccups, and burps that other uses may not even notice can cost them a game, and so gamers closely monitor network performance. Most ISPs know their gamers who are the first to complain loudly about network problems.