Gamers around the world are rapidly adopting cloud gaming, thanks to the many advantages it offers over traditional gaming on personal computers (PCs) or gaming consoles. In cloud gaming, the games are hosted on remote servers which means that users don’t have to purchase expensive gaming hardware to play their favorite games or graphic-intensive titles. Users can simply opt for a suitable subscription model and play on their PCs, laptops or even smartphones, with the help of a stable Internet connection.
With the advancement in graphics and overall gaming technology, the sizes of games are expanding, thereby increasing the download time. This acts as a hindrance for those who wish to immediately start playing a game because even with fast Internet, a sizeable game takes time to download. Developers also provide regular updates to their games, calling for further downloads. Cloud gaming, however, solves this problem as the games are streamed directly on devices without requiring any downloads.
The rollout of 5G services is sure to provide a leg up to cloud gaming. Factors like faster data transfer speeds and lower latency, at least when compared to 4G, make 5G more suitable for cloud gaming. A faster Internet connection can lead to a reduction in response time for any action taken in the game and hence, improves the gaming experience. Gamers can also play cloud games across multiple platforms, especially on smartphones which allow them to play wherever and whenever they want.
Thanks to these conveniences, gaming analytics provider Newzoo expects cloud gaming adoption to grow going forward. Per a report by Newzoo published on Aug 26, the worldwide spending on cloud gaming is set to
reach $1.6 billion by the end of 2021, up from $669 million in 2020. What’s more, the report stated that global cloud gaming revenues are expected to reach $6.5 billion by 2024.
The fact that users are becoming more interested in cloud gaming can be understood from a survey conducted by Newzoo. As mentioned in the report, about 94% of the respondents were aware of cloud gaming, 50% have already tried it and 44% are willing to try. Moreover, the survey found that users who tried cloud gaming have retained their interest in the service. Per the report, more than a third now play cloud games for three or more days a week.
This only shows that cloud gaming is rapidly becoming mainstream in games. In fact, the Newzoo report stated that by the end of 2021, cloud gaming is set to have 23.7 million paid users.
3 Stocks to Keep an Eye On
The popularity of cloud gaming is poised to grow further as it offers myriad benefits over traditional gaming methods, thereby improving the overall gaming experience. This seems like a good time to look at companies with strong fundamentals that can take advantage of this potential upswing. We have selected three such stocks that carry a Zacks Rank #2 (Buy) or 3 (Hold). You can see
. the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here Microsoft Corporation ( MSFT Quick Quote MSFT - Free Report) offers Xbox Cloud Gaming services and on Aug 24, the company announced that it is bringing the cloud gaming service to its Xbox Series X and Xbox Series S gaming consoles as well as the older Xbox One this holiday season. On Sep 14, the company announced new updates to the Xbox app on Windows 10 PCs which allow gamers to stream console games on such PCs, from the cloud or console.
Microsoft has rallied 34.6% year to date and it currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 3.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 8.4%.
NVIDIA Corporation ( NVDA Quick Quote NVDA - Free Report) offers GeForce NOW, a cloud gaming service. The company regularly adds titles to its gaming library and on Sep 9, GeForce NOW announced that the highly-anticipated title, Far Cry 6, will be available for streaming upon launch on Oct 7.
Shares of Zacks Rank #2 NVIDIA have risen 69.1% year to date. The Zacks Consensus Estimate for its current-year earnings has risen 5.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 68%.
Facebook, Inc. ( FB Quick Quote FB - Free Report) offers cloud games on the Facebook Gaming platform, where native Android and Windows games are hosted and streamed by Facebook, and such games are playable instantly on mobile and web.
Shares of Facebook have risen 29.2% year to date. The Zacks Consensus Estimate for its current-year earnings has moved 6.9% north over the past 60 days. This Zacks Rank #3 company’s expected earnings growth rate for the current year is 39.7%.