Cloud game streaming services have been quite a popular topic in the game industry in the past 15 – 20 years, as the perspective of playing a high-end game on a mediocre device with a good Internet connection sounds very alluring. But after numerous major game companies have invested hundreds of millions in their cloud gaming platforms, Microsoft says that the technology is still in its infancy and its prime time is nowhere close.
At least, this is what the software giant wrote in response to the U.K.'s Competition and Market Authority this week. Among the significant concerns CMA has regarding Microsoft's proposed acquisition of Activision Blizzard are withholding popular games like Call of Duty from competing platforms (namely Sony's PlayStation) and subsequent monopolization of the emerging market of cloud game streaming services. As a result, CMA launched an in-depth investigation of the proposed transaction earlier this month to learn more about the matter.
"This is a new and immature technology which the CMA has recognized faces significant challenges, particularly on mobile devices," Microsoft wrote in its 33-page response (opens in new tab) to CMA's concerns (via PC Gamer (opens in new tab)). "Microsoft agree that in future cloud gaming services may mean that hardware distinctions will become less important. However, the reality is that today cloud gaming remains in its infancy and unproven as a consumer proposition."
Back in the 2000s and for the better part of the 2010s, cloud game streaming services suffered from major technology limitations, starting from the imperfection of data centers and servers on the cloud side and a slow Internet connection on the client side. By now, many technological limitations have been largely overcome. Yet, local rendering still provides the best and most consistent visual quality and the lowest input lag, which is particularly important for avid gamers and something most gamers know.
Since Microsoft, Sony, and Nvidia continue to invest hefty sums of money in improving their cloud gaming services and providing an experience that is on par with that offered by local PCs or consoles, cloud gaming services are still not quite there. Meanwhile, they can enable playing PC or console games using smartphones, a type of experience that has not been available before and which is something that numerous companies are putting their money on (e.g., Qualcomm, Razer, and Verizon). But to compete against traditional games, streaming services will need to offer visual quality, latencies, and loading times comparable to those of downloadable titles.
"While this may grow, particularly on mobile devices, adoption is not expected to be rapid as it requires a significant change in consumer behaviour," Microsoft explained. "Gamers care about subject matter, storylines, graphical performance, speed (e.g., loading times and latencies), mechanics, game selection, and game cost. […] Streaming services therefore need to compete effectively with downloadable gaming options across these metrics if they are to grow."
Because cloud game streaming services are not popular among consumers, Microsoft says that it is not in its interest to harm competing for game streaming services or withhold popular Activision Blizzard games from rivals as it is interested in promoting cloud gaming in general.
"Consumer adoption of cloud gaming remains low," Microsoft said. "Harming or degrading rival services would significantly set-back adoption of this technology – protecting market-leading incumbents (i.e., Sony on console, Apple and Google on mobile, as well as Steam on PC). […] Instead, [Microsoft Xbox's] incentive is to encourage the widespread adoption of cloud gaming technologies by as many providers as possible to encourage the major shift in consumer behaviour required for cloud gaming to succeed."
Cloud gaming has the potential to bring games to devices incapable of rendering high-end titles locally, which will expand the global gaming market. Many technologies required for competitive cloud gaming platforms are already here, so the question is when cloud gaming will become a mainstream phenomenon. Yet, keep in mind that right now, Microsoft needs to convince the CMA and other regulators of two things: that they should not be concerned about cloud gaming today as it is an immature technology, but that the proposed takeover of Activision Blizzard will enable Microsoft to increase adoption of the technology.