As a Gamer, you may be wondering why Cloud Gaming Providers choose to charge you for their services. Why isn’t it free? This is a fair question to ask, because one side of Cloud Gaming is affordability. Cloud Gaming is supposed to save you money compared to owning a Gaming PC. So why do you have to pay for Cloud Gaming?
Cloud Gaming is a Business
This point is fairly straight forward, but it’s still worth mentioning. Cloud Gaming companies are operating a business, not a charity. While they may not generate tons of revenue, they do at least need to cover their costs. For many Cloud Gaming Providers, all they are doing is covering their costs.
Hardware and Network Expenses
We’ve talked before about how Cloud Gaming works. Companies like Paperspace and LiquidSky operate large data centers that power your Gaming experience. Their servers are stuffed full of Gaming-grade hardware. And that hardware isn’t cheap. It literally costs millions of dollars to host this type of solution in multiple locations around the world.
Because of this cost, other companies choose to rent Sever Farms from larger companies like Amazon and Microsoft. These types of Providers have a monthly rental fee to cover. They’ll need enough incoming revenue to cover their costs of operation.
And this doesn’t even touch on the cost of operating a world-wide network. Cloud Gaming is network-intensive and each Provider needs dedicated access to the internet in order to stream Games to you. You might think that your internet bill is too high, but it’s nothing compared to what these companies pay.
Free Cloud Gaming creates a Deficite
We’ve touched on the fact that Cloud Gaming is a business. As a business, there needs to be an incentive for all of the work and development that goes into it’s operation. And that incentive is the amount of revenue it can generate.
For now, Cloud Gaming is largely viewed as a future business. Although Cloud Gaming companies exist today, they haven’t overtaken traditional Gaming. It’s still more common for a Gamer to purchase and use dedicated hardware. With that said, Cloud Gaming companies are betting on its potential. It is expected that the world will transition to Cloud Gaming and Cloud Computing at some point. The cost and accessibility benefits are too good to ignore.
Today’s Cloud Gaming Provider is positioning themselves to be on the ground floor of the future. It’s important to be established by the time the rest of the industry decides to transition. They want to become the name that you think of when you talk about Cloud Gaming. Right now it’s anybody’s race to win, and each company plans to be the best.
This potential future is enough that some companies are putting off profits for now. They are either breaking even or operating at a loss in order to cement themselves as a destination for Cloud Gamers. The idea is that if they can attract enough paying customers, they can reach profitability by spreading out the costs among their members. In the meantime, most aren’t in a position to completely absorb the weight of their operation. This is an important insight into why Cloud Gaming isn’t free.
Cloud Gaming is an Experiment
Right now Cloud Gaming is a bit of an experiment. These companies are creating products based on the belief that Gamers will pay in order to play. The idea is that as long as Cloud Gaming is substantially cheaper than traditional hardware ownership, then players will come.
So what happens if players choose not to come? Well, then this whole experiment fails. Cloud Gaming companies will fail to meet their costs, and will be forced to shut down. As a Gamer, this isn’t a good scenario for you. Although each company loses when their business fails, you as a Gamer lose as well. You’ll be forced to either pay more for Gaming hardware, or not to play at all.
Your money matters
It’s one thing to say that you’re in favor of Cloud Gaming, but it’s really your money that does the talking. Your money shows that you’re invested in this type of future. So while we are used to things being free in other industries (such as Apps and software), it’s important to remember that Cloud Gaming is different. Cloud Gaming companies need your support in order to move forward. They can’t just throw up ads in their Apps and then offer free service. Advertisers are still wary of Cloud Gaming, and they aren’t paying enough to compensate for the popularity that a free ad-supported service would bring. LiquidSky tried this, and found that it caused them to operate at too much of a loss.
So the bottom line is to remember that when you subscribe to a Cloud Gaming service, it’s not completely about what you’re getting personally. There is a bigger future at stake. If you enjoy Cloud Gaming, then consider supporting these companies as much as you can. Because the reality is that the future is not set in stone, and it’s more fragile than you think.
Also published on Medium.