Niko Partners: Asia’s cloud gaming addressable market will triple to 500M by 2025

Cloud gaming could reach an addressable market of about 150 million people in 2021, but actual numbers of cloud gaming users are smaller than that, according to a report by market researcher Niko Partners.

Niko Partners estimated the addressable market for cloud gaming is about 10% of the total population of 1.5 billion gamers in the Asian region today. But that could grow to more than 500 million by 2025, Niko said. This doesn’t mean 150 million cloud gaming subscribers are currently in the region. It means that is the possible reach if everyone who could sign up actually did.

Niko didn’t say exactly how many subscribers cloud gaming has right now. The report covers the overall region, current services, and the outlook in countries including China, South Korea, Japan, Chinese Taipei, Indonesia, Malaysia, Singapore, Vietnam, Thailand, Philippines, and India.

Niko said that of the 1.5 billion players in Asia, about 1.4 billion are playing on mobile, 550 million are playing on PC, and 50 million are playing on consoles.

“As with many aspects of gaming, Asia is leading the way in cloud gaming too. This is true both in terms of infrastructure and number of companies in the space with market ready products,” said Lisa Cosmas Hanson, president of Niko Partners, in an email to GamesBeat.

Asia is a mobile-first gaming market and most people’s first experience with cloud gaming will be on smartphones. Therefore, 5G will be a key requirement for the viability of cloud gaming. Cloud gaming companies and the broader games industry will need to focus on three key areas to ensure they can offer a high-quality service to users: infrastructure and network, content and experience, and value and cost.

Cloud gaming is still in its infancy within the region, with only a few countries offering cloud gaming services. South Korea, Japan, and Taiwan are the most developed cloud gaming markets in Asia, while the Philippines, Malaysia, and India are the least developed.

Niko believes that South Korea is the most viable market for cloud gaming today, with SKT 5GX Cloud Game (Xbox) being the most likely service to succeed given its advantage in content, accessibility, and value, paired with strong 5G and broadband infrastructure across the market as well as an already strong gaming culture.

Above: Niko Partners notes the internet infrastructure behind games in China.

Image Credit: Niko Partners

While cloud gaming will allow mobile gamers to access high-end console and PC games for the first time, it will also allow gamers with low-end smartphones to play high-end mobile games without compromising on graphical quality or performance.

Cloud gaming requires a consistent internet connection to provide a good user experience. While some low resource-intensive and slow-paced games may work fine on 4G, it is clear that 5G or fiber broadband is needed in order to truly enjoy the cloud gaming experience. Cloud gaming is also reliant upon the underlying technology stack, network, and server components at every stage of content delivery. That means companies and governments will have to make a lot of investments.

The report highlights companies that are considered key to the cloud gaming market: Tencent (Xianyou), Xbox (Cloud Gaming with Xbox Game Pass), Ubitus’ (B2B cloud gaming solution), RemoteMyApp’ (B2B and Vortex.gg), Nvidia (GeForce Now), and Blacknut (B2B & B2C cloud gaming solution).

Tencent’s Xianyou cloud gaming platform launched in April 2020 and offers over 100 games across mobile, PC, and TV. Xianyou’s primary focus is offering mobile games in the cloud, with WeChat and QQ login integration to provide a seamless experience for existing mobile gamers. Xianyou will offer a new controller created for mobile gamers to play console-like games.

“Companies that own multiple parts of the cloud gaming value chain will definitely have a competitive advantage,” Cosmas Hanson said. “There are numerous companies operating in Asia that are well-positioned to succeed. The companies included in our ecosystem chart are representative of each segment but not a comprehensive list.”