Cloud Gaming: Can It Scale And Succeed?

What’s driving the future of games? To find that out, 80 Level and Room 8 Group teamed up to conduct research, exploring three hot gaming trends — UGC, AI, and cloud gaming. In this article, we take a closer look at cloud gaming: its wins, hurdles, and what they mean for tomorrow’s players.

Room 8 Group is an end-to-end strategic partner in external game development. Working across all platforms, the company provides creative and technical solutions across art, game development, technology, trailers, and QA for AAA and AA games.

The cloud gaming industry has shown significant growth in recent years. According to Statista, market revenue increased from $1.1B USD to $6.9B USD in 2020-2024 and is projected to hit $18.7B USD by 2027. The number of cloud gaming users is also growing considerably: the player base has expanded more than 6 times, from 62.5 to 395.9 million people in the period between 2020 and 2024.

Cloud gaming is transforming the way people play by making high-quality gaming experiences more accessible. The technology provides the following advantages for players:

• No need for expensive hardware. Since the game runs on powerful remote servers, players can enjoy high-quality graphics and smooth gameplay without buying expensive PCs or consoles.
• Instant access to games. Players don’t need to install games on their devices and worry about their storage space. A large number of games can be found on the cloud, where players can play instantly.
• PC, mobile, or TV — play anywhere. Players can use any device to jump into the game and play anywhere if they have a stable internet connection. A good recent example of cloud gaming in action is this review of Assassin’s Creed Shadows by games journalist Stephen Totilo. He spent 47 hours playing the same save file on six different platforms, which he said “felt like a glimpse into gaming’s future.”
• Opportunity to try games. If the provider offers a subscription-based plan, users can try different games without having to buy them separately.
• Social life. Cloud gaming opens new opportunities for multiplayer games. People from different devices and locations can interact with each other and have the same gaming experience.

I believe cloud gaming will be a significant driver of innovation and accessibility in the coming years. By running games on powerful remote servers rather than local hardware, it lowers the barrier to entry for players who might not have the latest console or a high-end PC. This, in turn, broadens the potential audience and will bring new experiments with different genres and experiences.

Moreover, developers can modify and update game content on the cloud dynamically without requiring any downloads on the player’s side. This allows them to customize the player experience in real time.

Jan Sechovec, Technology Director at Revolgy’s Cloud Gaming Department:

Due to streaming, the game studios can self-publish the game and release it in real time. And because of the streaming nature, they are also able to customize the end-user experience on the go.It’s great that you can dynamically stream different content to different audiences because people normally buy physical games or install games from stores. Of course, there are live update servers that can be modified somehow, but streaming enables the creation of content dynamically, including the code, because you are not giving up the executables. The only thing that goes to the players is the pixels that are generated in real time.

Games can be seamlessly updated across multiple devices. Studios don’t need to redevelop them. This can be a cost-effective way to expand the reach of games across platforms.

Daphne Parot, CMO at Blacknut:

If you develop a game for PC, you can make it playable on a mobile or a smart TV, and you don’t have to redevelop the game to make it available on a TV screen, a PC screen, or a tablet. I think it’s a great opportunity to bring your game to a new audience and new devices at no additional cost.

Cloud gaming is reaching new milestones, making it possible to host huge numbers of players simultaneously without losing connection or content quality. Recently, Amazon achieved something never done before — they managed to support 100 million concurrent users in a single game. With such advancements, games can become more immersive and bring together many more players.

Shayan Sanyal, Global Games Industry BD Leader at AWS:

One of AWS’s most significant achievements to date was building game services for the world’s most demanding games, such as Fortnite and PUBG, which run on AWS massively worldwide. Just last week, we announced a benchmark for Amazon GameLift, where we had 100 million concurrent users for a single game. This is groundbreaking! It’s never been done before! The test also showed that we were able to add 100,000 players to the game per second and spin up 9,000 compute instances per minute. Does the world need this right now? Probably not. I can’t see that I would immediately deploy it into a game. But if people were to start thinking about world building, massive integration of different social networks, and bringing together fans in massive arenas, this could significantly change the way developers perceive how they can use the cloud to unlock new social fabrics in their games.

Despite significant progress, cloud gaming still faces challenges related to infrastructure, performance, and cost. Industry experts highlight various hurdles that must be addressed to make this technology scalable:

• Latency issues. The technology is very dependent on internet speed and server location. That’s why performance can vary significantly between locations, working seamlessly in some areas while being unreliable in others.
• Bandwidth. Cloud gaming relies on transmitting large amounts of data, which can lead to excessive compression that degrades graphics quality. Streaming a game requires a graphics processing unit (GPU) somewhere in the cloud, and bandwidth demands can be high, particularly in areas with unstable internet connections.
• Infrastructure and scalability. The availability of GPUs remains a bottleneck, even for large-scale cloud providers. The hardware required to serve millions of players is still scarce, and 5G infrastructure can be blocked or limited in some areas. Moreover, some people may not have a device to start playing on the cloud, which can also be a problem for scaling cloud gaming. 
• The economics of cloud. Building a sustainable economic model can also be considered one of the biggest challenges for developers. If the unit economics do not work — balancing the cost of computing power, bandwidth, and user affordability — cloud gaming cannot scale globally.

While cloud gaming still faces hurdles, developers are trying to find ways to create a more seamless and accessible experience. Improved infrastructure, AI-driven optimizations, and better economic models will help, if not overcome, at least minimize the negative effects of these challenges. Even full adoption of cloud gaming will take a long time, our interviewees believe that this technology will definitely become a cornerstone of the gaming industry’s future.

Manolis Emmanouilidis, Co-Founder at Arcware:

The biggest hurdle is still latency. When you’re playing fast-paced games, that tiny delay between your input and what you see on screen matters. And right now, streaming just can’t quite match the responsiveness of playing locally. That quality loss, that little bit of lag, it’s a real issue. So, while cloud gaming has immense potential, it’s still reliant on internet speeds and streaming technology catching up.But make no mistake, cloud gaming is the direction we’re heading. Within the next ten years, I genuinely believe it will become the dominant way we play games. The key to unlocking that future? A massive upgrade to our internet infrastructure. That’s the catalyst that will change everything.

This article has covered only the tip of the iceberg. There are still many questions to explore:

• How can cloud gaming overcome its challenges?
• Will 5G be cloud gaming’s savior?
• How will the market adapt to this technology?
• Will cloud, AI, and UGC converge? And what is the future of this combination?