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The push to subscription and cloud based gaming services has one fundamental assumption baked in... that there is an untapped customer base out there that has balked at joining the current PC or Console gaming ecosystems. But what if this assumption proves incorrect?
According to EEDAR's Gamer Segmentation Report, 2 out of 3 Americans plays Video Games of some sort. Of those that play, half have spent $0 over the past 6 months on gaming, choosing only free to play, primarily Mobile, games.
Let's start with the 2 out of 3 that play Video Games. Are the remaining 1 out of 3 active rejecters of Video Games, and an audience that will not adopt even Mobile games, let alone more immersive content? I'd argue that a high percentage of this group are likely exactly that.
So then we come back to the half of the current gaming audience that is willing to spend $0 on gaming. 1 out of 3 Americans plays Video Games, but spends nothing. What subscription or cloud service could draw them in? An ad based service? Would it look a lot like Mobile now?
So the primary audience for these services, at least to start, are the members of the current gaming audience that actively participates and purchases on PC and Console (while also playing Mobile). Are the cloud/streaming options going to provide an improved consumer experience?
Will the cloud/streaming options offer lower prices? Exclusive content? Or is it primarily a convenience play? This audience values premium experiences, lag free play for example. If these services cannot provide this at launch, what does that mean for long-term adoption?
And if the current 1/3 of Americans that pay for Video Game content now are slow to adopt, and the 1/3 that spend $0 continue to want to spend $0, and the final 1/3 are active rejecters... I just don't see the cloud future as a slam dunk proposition.
So, we have to wait and see the offerings take shape, and gauge adoption and consumer sentiment. But I have a hard time not thinking that "the Netflix of games" idea is really square peg/round hole. It just doesn't fit with how consumers participate in the VG market. We'll see.
