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Riot Games' CEO Marc Merrill on the future of cloud gaming
October 12, 2022
Cloud gaming is by no means a new trend in gaming, but is quickly becoming a part of every gamer’s vernacular. Even though we recently said goodbye to Google Stadia, GeForce Now, PlayStation Plus, Xbox Cloud Gaming, and Amazon Luna are all still going strong, and it’s hard to ignore the hold that cloud gaming has had on gaming audiences so far. In fact, the cloud gaming industry is projected to be valued at over $20.9bn by 2030, making it one to watch for the future.
In the latest of the webinar series, ‘Anzu Talks’ from Anzu — the world’s most advanced in-game advertising solution — Anzu CEO and co-founder, Itamar Benedy, was joined by special guest Marc Merrill, co-founder and president of games at Riot Games, to share his thoughts on this new and exciting trend in gaming.
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Disrupting the industry
Kicking off the discussion, Benedy asked Merrill how much he thought cloud gaming would disrupt the industry in a meaningful way.
“The game industry can be disrupted by new technologies, and I do think that cloud gaming is one such technology,” Merrill replied. “But that being said, the industry is so diverse and large, and there's so many different player needs, that different solutions need to be optimized to solve for.
“What tends to really happen is new innovations or new platforms oftentimes expand the growth rather than cannibalize other growth.”
Merrill noted a few exceptions to this rule, quoting the reduced predominance of arcades compared to the 80s. “Cloud gaming is going to grow over time and take a larger and larger share of player hours.”
Why cloud gaming isn’t going anywhere
When asked what sort of benefits cloud gaming could bring to the gaming experience, Merrill began, “There's a lot of great benefits that can come from cloud gaming — high-end experiences available on all sorts of different devices, without the need to install software.” He elaborated that cloud gaming was capable of a lot of “cool processing”, improving AI technology, and providing solutions that enable instant friend play to jump straight into your favourite games and gaming content by streamers. “There's a million different cool player experiences that can be designed by enterprising game teams.”
Merrill, however, admits that despite its vast and unique opportunities, cloud gaming isn’t out of the woods just yet, explaining that cloud gaming technology was simply an enabler, necessary for gaming experiences but insufficient on its own. “You also need an incredible team that has identified a particular player need,” he went on, “and then has designed a great solution to solve that particular problem.”
Using Google's pivot towards becoming a technology enabler to content companies as an example, Merrill shared that he thought this was the right strategy compared to trying to build a 'one-size-fits-all' cloud gaming platform. He explained that this would work better in comparison to something that would be the equivalent of a Netflix, with games as part of a subscription service based on the ability to play in the cloud. “I think it's much more compelling to unlock the potential for game developers to enhance their experiences for whatever game that they're trying to create, through access to this massive infrastructure and cloud computing and technology. I think that's how a lot of cloud gaming is going to show up over the next decade or so.”
Cloud gaming becoming the de facto standard
Benedy and Merrill then moved on to discuss what they thought the future of cloud gaming looked like. “Ultra long-term, it's hard to predict as time goes beyond a decade,” Merrill speculated, “and it could very well become the de facto standard, as 5G and various other technologies become much more ubiquitous.”
Benedy replied that with Comcast working on 10G right now, it would be interesting to see how this would impact cloud gaming and game streaming capabilities. “My take is that cloud gaming can disrupt console gaming in a similar way to what CTV did to cable linear television,” said Benedy, elaborating that Smart TV hardware would replace the console hardware, which would then provide the same accessibility that mobile gaming has but with a larger screen, and providing “maybe even better experiences than the console platforms today.”
It’s not just Anzu and Riot Games predicting big things for the future of cloud gaming. Valve’s immensely popular new handheld Steam Deck, despite not releasing any sales figures publicly, has apparently done so well that a Steam Deck 2 has been teased in a company booklet. Logitech also threw their hat into the handheld cloud gaming console ring with the announcement of their new Logitech G Cloud, which primarily uses game streaming services like Xbox Cloud Gaming and Nvidia GeForce.
Merrill replied that while the market would likely grow for cloud gaming, how much cannibalization will happen on console platforms, for example, would be extremely hard to predict. “Part of the reason is, the most engaged and valuable segment of gamers — people who love games who prioritize games as a meaningful part of their life — are willing to pay to have a great premium device to ensure the best experience possible.”
Will the cloud replace the console?
Merrill explained that part of the challenge and opportunity for cloud gaming companies is how closely they can match the gameplay experience from a performance standpoint. Meanwhile, the opportunity and challenge for the console companies is how to stay ahead and add the value proposition to that super engaged audience to continue to ensure that they provide those types of experiences that you can only get with having a premium hardware device.
Using Microsoft’s example of “hedging it and doing both” by making a huge investment in cloud gaming and its Xbox consoles, with between 25-30 million Game Pass subscribers in 2022, Merrill went on to conclude “I think that there's going to be advantages to having a shared ecosystem, as well as some trade-offs around doing pure cloud or pure hardware”. He finished that there will likely be a trend where cloud takes on more and more of the share over time, but that it would take a very long time to fully replace hardware gaming, “because the tech bar and the experience bar is very high.”
Benedy concluded the discussion on cloud gaming by mentioning the acquisition of Bungie by Sony, the Microsoft deal with Activision Blizzard, and how Take Two acquiring Zynga for their foray into mobile was a potential sign of their commitment to cloud gaming in the future. With so many big and well-known names from the global tech, hardware, and gaming industries getting involved at such a prominent stage of cloud gaming, gaming audiences will have to hold their breath and watch this space for further developments over the next decade.