Yesterday, through a fault of my own in the language I used, I made a general statement in commentary on Sony’s CEO, Kenichiro Yoshida, expressing his concerns about cloud gaming. I said, every display has to be game capable.
In hindsight, that is too general so let me start by saying what I meant to convey:
Firstly, Yoshida was concerned about streaming gaming, and that was really all I had in mind so, every display that is capable of playing streaming video should be capable of playing streaming games. So, that’s a broad range of displays. We can get into what “game-capable” means later.
Secondly, I used the term games and that has a very broad meaning, and I should have probably clarified that it should be streaming gaming .
Thirdly, ;Jon Peddie took umbrage at my saying there are 3 superpowers in gaming, Nintendo, Sony, and Microsoft saying that they are console companies and that PC gaming is the biggest gaming market. He wrote to me, “In 2022 18.78 million consoles were sold. In that same period, 33.8m desktop graphics boards were sold, and at least 60% (probably more like 85%) of them went to gamers or people who game with their PC, plus the mobile gaming PCs like the one you are getting. We estimate the number at 50 million plus and is likely 75 to 80 million based on game SW (software) sales. PC gaming HW (hardware) outsells consoles in units and dollars by over 3:1 and even more in dollars. It also outsells console in SW (games) sales.”
This one is a toss up for me because these three companies do control the majority fhe gaming market, and as you can see below, in a recent anti-trust case brought by the UK government to stop Microsoft’s acquisition of Activision, one of the three superpowers is also the superpower in PC gaming.
In relation to cloud gaming services, we provisionally found that Activision’s titles (including CoD and certain PC titles such as World of Warcraft) will be important for the competitive offering of cloud gaming services as the market continues to grow and develop. We provisionally found that, after the Merger, Microsoft would find it commercially beneficial to make Activision’s titles exclusive to its own cloud gaming service or available there on materially better terms than on rival cloud gaming services. Given we have provisionally found that Microsoft already has a strong position in this market through its ownership of Xbox, a global cloud computing service, and the leading PC operating system (OS), we are concerned that even a moderate increment to its strength may be expected to substantially reduce competition in this developing market to the detriment of current and future cloud gaming users.
The UK Competition and Markets Authority (CMA)
The other point that I want to make, and it may be a bias of mine entirely, streaming games will, in near future, be the single point of entry for most game play. I believe that firmly and there are reasons for that belief. Games are played for entertainment and that’s why people love them, and not because of any particular platform or format. Why else are the UK authorities so concerned about Microsoft tying up major titles on its own platforms.
It’s also important to note that most of the upcoming generations of game players are growing up in a smartphone-centric world and not a PC-centric world. Their needs and expectations are going to help define game delivery, and that’s unlikely to be PC centric. We have seen younger generations fundamentally change how film and television content is consumed. They still go to movie theaters, by the way, and they may still play PC games, but they are also just as comfortable watching a blockbuster on their phone.
There are other factors at play here, as well, which mirror the film world: the price of creating content has gone up and continues to go up, and budgets for top-tier games rival those of Hollywood blockbusters. And like those blockbusters, these titles have to find as broad an audience as possible. At some point, that means delivering games to whatever display the consumer is on. This is why streaming gaming is so important and why there is a diminishing return on investing in a single platform or assuming that one piece of hardware has dominance or is influential over all others.
Circling back to displays, I don’t really care where the display is – back of a car seat, airplane, smartphone, attached to a PC, or hanging in a living room – gaming, in the broadest sense of the word, has to be treated on a par with streaming video, and for the majority of devices, lacking the power of a console or PC, that means streaming games. Microsoft and Sony may have most of the power in streaming games today, but that will change once the delivery of streaming games becomes more reliable. It is what it is for now.
In pure technology terms, none of this actually means much for displays other than a consideration that interactive entertainment is part and parcel of the viewing experience. The actual measure of a displays gaming compatibility is highly subjective, and when it comes to streaming, it becomes even less critical to assume that there is a such a thing as a streaming games monitor. Streaming is all things to all peoples.
The best refresh rate and screen resolution for gaming depend largely on the individual, their relationship with video games, and their computer. If you’re a casual gamer, 60 Hz and 95-110 PPI should be fine. If you’re in a competitive league, 144 Hz and 110-140 PPI might be a better fit. Some top-of-the-line gaming monitors have a refresh rate of 240 Hz and screen resolution above 140 PPI, which can be essential for a professional gamer.
Microsoft
Does that hurt specialized display markets in any way? No. Gaming monitors are attached to PCs, and when people stop buying gaming PCs then they’ll probably stop buying gaming monitors. And while there are 42-inch curved gaming monitors, and large display TVs that claim to have the performance to handle games performance with higher refresh rates and response times, the majority of gaming monitors are still 23-37 inches with premium pricing and a niche audience.
A three-year growth streak for gaming PCs and gaming monitors came to an end in 2022 as worldwide gaming PC shipments declined 6.4% while gaming monitors declined 7.1% compared to 2021, according to the International Data Corporation (IDC) Worldwide Quarterly Gaming Tracker. A total of 44.9 million gaming PCs and 17.3 million gaming monitors were shipped during the year, which was well above pre-pandemic levels in 2019. Looking ahead, IDC expects 2024 to be a year of recovery as 2023 will be marred with macroeconomic challenges, inventory issues, and lack of meaningful upgrades.
IDC
IDC actually predicts that shipments of desktop PCs for 2023 will be 206.8 million units, a 10% drop from last year. So, taking Jon Peddie Research’s numbers for gaming hardware, and knowing what we know about gaming monitor shipments, gamers are anywhere from 20-35% of the desktop market in numbers, and gaming monitors are less than 10% in terms of number of new users. Still substantial, but the PlayStation network has over 100 million monthly average users (MAUs), Microsoft’s Xbox has about 55 million MAUs.
Growth is going to come from streaming games and subscriptions. Sure, there are issues with the quality of service over the internet, but they will get fixed, and I imagine we will see a significant increase in the performance of the web with rapid investment in everything from the internet of things (IoT) to AI to 5G. I grant that 5G hasn’t taken off at the speed that everyone had hoped for, but it will take off.
So, in my mind, appealing to gamers is part of the marketing need to appeal to all consumers of entertainment. Just like I said, that goes for any display. If the display has any apps on the home page, one of them better be streaming gaming.
That’s all I meant and now I have taken many, many more words than is good to consume on a Friday to explain myself. If you disagree or have anything to add, reach out and I am happy to continue piling on more sentences about the subject.
