China’s cloud gaming market expected to quadruple in size by 2022 amid 5G push, report says

Josh Ye

As China rapidly deploys 5G services nationwide, its cloud gaming market is projected to quadruple in size by 2022, according to a report by research firm CNG.

In its 2020 Cloud Game Industry Survey Report, the Beijing-based firm said it expects the country’s cloud gaming market to be worth 1 billion yuan (US$141 million) in 2020 and at least 4 billion yuan by 2022.

“Based on what we can see from financial and material investments in various fields, the next three to five years will be a period of rapid growth for cloud gaming,” CNG said in the report.

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However, the industry will have to overcome technical and policy barriers before it is able to achieve its full potential, the research company said.

Cloud gaming, where games are streamed over the internet rather than from a device’s internal memory or removable media such as cartridges or discs, is one of the hottest emerging areas in mobile entertainment.

China hopes cloud gaming will spur demand for 5G

The concept has been around for years, but the more recent growth of cloud data centres and the roll-out of 5G – with peak data rates up to 100 times faster than 4G – have opened up new possibilities by reducing network latency, one of the format’s biggest problems.

This crucial infrastructure is still in the early stages of construction and it will take time before it will really benefit cloud gaming, CNG said, adding that a lack of profitable business models and government limits on game licenses are also factors that could hinder the growth of the sector.

Still, some of China’s tech giants have already been betting big on the sector, hoping to find new ways to engage the country’s enormous gaming audience – estimated at about 685 million users as of 2019, according to game consultancy firm Niko Partners.

Tencent Holdings, which runs the world’s largest video games business by revenue, has already adapted many of its games for the cloud and recently showed off a novel advertising format enabling gamers to play its new Street Fighter game from an online advertisement frame, without having to download the game.

China’s second-largest game developer, NetEase, also launched its own cloud gaming platform late last year, offering more than 120 games that can be played via a web browser or mobile app.

Meanwhile, Chinese telecommunications giant Huawei Technologies, a newer player in the gaming space, has formed a series of partnerships since last year – including with both Tencent and NetEase, as well as with Shanghai-based developers 37Games and Yoozoo – to develop 5G cloud games.

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