Parks: U.S. Online Video Game Market to Generate Nearly $3 Billion in Annual Subscription Revenue

Online video games are growing in popularity, especially among multi-player formats. New research from Parks Associates finds the U.S. cloud gaming market could generate nearly $3 billion in annual subscription revenue, as 30% of domestic broadband households currently express interest in this service.

Dallas-based Parks reports 74% of U.S. broadband households play video games for at least one hour per week. Gamers play for an average of 22 hours per week, a number skewed towards heavy gamers, and PC gaming shows the biggest gains as a result of COVID-19 pandemic.

“There is a renewed interest in offering cloud gaming services that replicate Netflix’s value proposition by allowing consumers to stream games over the internet, across multiple platforms, and without having to download files or use local processing power,” senior analyst Kristen Hanich said in a statement.

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Hanich estimate the cloud-based gaming market could generate more revenue via service stacking and add-on sales as multiplatform gamers are the key consumer segment to target for initial rollouts.

The research also notes the average number of hours played per week has increased since the COVID-19 outbreak. PC gaming in particular saw a large increase in the number of hours played weekly, while gaming consoles were the only platform to show a decline in usage among heads of household from Q3 2019 to Q1 2020.

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“Cloud gaming services enable providers to leverage this increased gaming on connected devices, including smart TVs and streaming media players, where gaming is often secondary to their main value proposition, Hanich said. “The continued improvement of Internet networks and the cloud, as well as the rollout of 5G with its promises of improved latency, enables companies to offer high-performance cloud gaming solutions across multiple platforms without taxing their limited processing power.”

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