AI and cloud could make gaming consoles niche products by 2035
Will data centers kill video games as we know them?
A gamer plays with an Xbox controller. Photo by Anusak Laowilas/NurPhoto via Getty Images
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- Bloomberg Intelligence forecasts cloud gaming could reach $38 billion by 2035.
- AI and data center growth could lower costs for running cloud gaming services.
- Xbox Cloud Gaming and PlayStation Plus may be better positioned than Nintendo.
- Consoles may not disappear, but could become niche products for enthusiasts and collectors.
Key Takeaways by nexos.ai, reviewed by Cybernews staff.
The gaming industry is on the cusp of another evolutionary phase, as cloud gaming is expected to replace consoles. This may be bad news to gaming giant Nintendo, but not Xbox or PlayStation.
Cloud gaming could become a $38 billion market by 2035, Bloomberg Intelligence (BI) forecasts, with the shift accelerated by AI infrastructure, falling computing costs, and new ways to access games.
The market currently stands at around $4.9 billion, according to some estimates.
As modern games require increasingly powerful processors and graphics hardware, cloud gaming could solve the problem of constantly needing to upgrade consoles. However, this might also come with more in-game advertising.
AI could help reduce cloud gaming costs, while investments in the data center infrastructure used by streaming services would also help, according to BI's forecast.
BI analysts argue that the current rapid expansion of data centers could create excess GPU capacity later this decade, benefiting cloud gaming. If they’re right, greater supply and competition could also reduce computing costs for cloud-gaming operators.
Microsoft's Xbox Cloud Gaming and Sony's PlayStation Plus could be better positioned for this change than gaming giant Nintendo, whose current business model has treated cloud gaming as peripheral to its strategy.
Disc-less future
In either case, BI doesn't expect gaming consoles to disappear entirely. More likely, they'll become niche products aimed at enthusiasts seeking premium performance and potentially collectors, similar to what happened to record players in the age of music streaming.
The shift toward cloud gaming would be a logical continuation of current trends in the gaming industry, which keeps sending signals of moving away from physical to digital.
Sony said it would stop producing physical discs for new PlayStation games from January 2028, citing consumer preference for digital access. The move has sparked a backlash from gamers, who claim it would strengthen the company's monopoly and hurt users.
Meanwhile, Nintendo said it had “no plans” to go disc-less.
BI's forecast is just one of several forecasts, with wide differences in market estimates demonstrating how difficult it is to predict long-term trends.
Several reports from Fortune Business Insights, Grand View Research, and Market Research Future project that the cloud gaming market could reach anywhere between $50 billion to $159 billion within the next decade.
