Cloud gaming report: Tracing the consumer journey

The potential of cloud gaming as a technology is significant. It eliminates the need to own physical games, makes it feasible to play cutting edge titles on hand-held devices without being bound by hardware limitations, and fulfills the gamer dream of a seamless playing experience both indoors and outside. The race to gain a foothold in the market is not a coincidence: traditional video game hardware developers, who continue to expand their cloud gaming offerings, have now been joined by non-traditional market players from the world of media, tech and more who are launching their own services and entering the fold.

The attraction is clear. Most consumers are already video gamers of some kind – 8 out of 10 in the ConsumerLab study identify themselves as video gamers. When it comes to platform choice, the offering is already diverse too, with consumers mentioning 30+ cloud gaming platforms in the study. And Connectivity Service Providers (CSPs), having deployed 5G, have embraced cloud gaming as a service offering to the consumer market (it is the second most common service offered to the consumer market in a previous ConsumerLab study). On paper, the path to adoption of cloud gaming should be relatively short therefore, and industry analysts project significantly increased market value in the sphere.

Yet despite these strong conditions, cloud gaming uptake among consumers appears to still be relatively slow. So what are the explanations? And how can these hurdles be resolved or alleviated by CSPs, in order to unlock the full potential cloud gaming pesents?

Understanding cloud gaming uptake: consumer segmentation

To be able to understand the behavior and attitudes towards cloud gaming in more depth it is necessary to see consumers as smaller groups, as consumer segments. This helps provide a better understanding of how engaged consumers are with gaming in general, which consumers drop out from the cloud gaming customer journey, and why.

Seven consumer segments were created from a cluster analysis of smartphone users on 4G or 5G, in the age interval 15-69 years. The segments were based on:

• how much they play video games,
• the type of device they use to play video games
• their purpose when playing video games.

The chart shows that smartphone users can be divided into three major groups, which can then be further divided into subgroups.

1. Heavy gamers, 35 percent, comprised of:
   • All-device eaters (who play video games on all devices, and are heavy on console gaming)
   • PC-centric (who play video games mostly on PC)
   • Mobile-centric (who play largely on mobile devices).
2. Casual gamers, 48 percent, comprised of:
   • Social gamers, who spend relatively many hours playing with others
   • Time killers, who play video games simply to kill time
   • Light gamers, who only play video games for only two hours or less in total each week.
3. Non-gamers: The smallest major group, only 18 percent of all smartphone users are identified as non-gamers.

Cloud Gamers tend to choose smartphones as their go-to device for this kind of gaming

Now that we have outlined the different smartphone users and their relationship with video gaming in general, it’s time to explore just who the typical cloud gamer is.

According to the data: a middle-aged white-collar man who is relatively well-educated, living in a household of three or four people, in the center of a larger city. And at present cloud gamers are more often technology interested early adopters.

As many as 68 percent of the smartphone users who claim they play cloud games regularly identify as heavy gamers, despite heavy gamers only accounting for 35 percent of all smartphone users in total. Most often cloud gamers belong to the heavy console gamer segment, the ‘all-device eaters’ (29%).

Important to mention is also that a clear majority, 68 percent, of all cloud gamers are 4G users, and only 32 percent 5G users. But on the other hand, the smaller group of 5G users are more active and play cloud games in larger extent than 4G users.

On average, as many as 45 percent of all cloud gamers select a smartphone as the primary device. As a second and third device there is competition between laptop/PC and games console, which two in ten cite as their primary device. This means that nine in ten choose any of these three devices for cloud gaming. Other devices also mentioned as primary devices are smart TVs, tablets, and AR headsets (less than five percent).

Understanding the connection type used to play cloud games is highly relevant. One in three primarily play on mobile networks (4G/5G) while another third play on Wi-Fi via fixed broadband (fiber, ADSL etc). In other words two out of three choose one of these connectivity solutions for cloud gaming. Wired fixed broadband (fiber, ADSL etc) and 5G FWA is also cited, but by less than 20 percent. The most common connection and device combination is a smartphone on a mobile network, which 18 percent claim is their primary choice.

On average gamers spend seven hours per week cloud gaming, of which half is done on a mobile device. This varies significantly according to group: the ‘all-device eater’ heavy gamers play as much as 20 hours per week, while casual gamers only spend two hours per week.

Mapping the Six-step cloud gaming customer journey

To understand when potential cloud gamers drop out on their way to becoming a satisfied cloud gamer, it is helpful to use an established model. In the study a six-step cloud gaming customer journey was mapped to analyze the different segments where drop out occurs. In each of the six steps there is the possibility that a potential cloud gamer drops out while others remain and continue the journey.

The six steps a consumer must take to become a satisfied cloud gamer are:

1. Awareness of cloud gaming
2. Interest in what cloud gaming is and offers
3. Consideration of playing cloud games
4. The trial step, where the consumer tries playing
5. The action step – a consumer who continues to play cloud games at least weekly
6. Retention, where the consumer is now a satisfied cloud gamer and most likely to become loyal to cloud gaming, cloud gaming platforms and become an ambassador for the technology

Highest dropout rate after trying cloud gaming

The model illustrates where potential cloud gamers drop out, as well as how this drop out looks for each of the seven consumer segments and their own unique customer journey.

1. Awareness step. As many as 24 percent drop out already at the first step, the second largest drop out in the journey. They have not even heard about cloud gaming.
2. Interest step. A further 15 percent drop at the next step, the third largest in the journey. This means that 61 percent of all smartphone users remain after. All of these have some kind of interest for cloud gaming as such.
3. Consideration step. Half (51 percent) of all smartphone users remain to consider playing, only a 10 percent drop out from the interest to consideration steps. The 51 percent smartphone users don’t just have common interest for cloud gaming, they would actually like to try it out.
4. Trial step. 42 percent actually try to play cloud games, meaning nine percent drop out. If heavy gamers consider playing cloud games, they are also likely to try playing, but casual gamers more often drop out before actually trying.
5. Action step. Only 15 percent of the original smartphone user base remain at the action step and continue to play regularly. This is clearly the largest dropout. This dropout between trial and action step translates to a 27 percent dropout, which means two in three of who try to play cloud gamers do not continue to play cloud games regularly. About half of them quit playing entirely and the other half admittedly continue, but extreemly rarely.
6. Retention step. The dropout at the retention step is the smallest in percentage. Only five percent drop out. But the drop out from 15 to 10 percent means that every third cloud gamer is not satisfied despite continuing to play.

Four factors explain the reasons behind the dropout

A factor analysis shows there are four main factors explaining the dropout at the most important dropout step, going from the trial step to the action step and continue to play regularly, and these factors are relatively well established among all consumer segments.

1. Pricing and payment model. Almost half (47 percent) of those who stopped playing cite pricing. Either because the games are expensive or the monthly cloud gaming subscription fee was too high.There is a difference according to group here: ‘Heavy gamers’ tend to play traditional games for “free” after investing in devices and games, while ‘casual gamers’ play mostly free smartphone games.
2. Device and network: As many as 45 percent mentioned lack of reliable equipment, networks or capable devices, as the main reason for dropping out after trying. Potential cloud gamers don’t think they can trust the mobile networks to continue playing cloud games based on their experience, or believe their current device isn’t good enough. As mentioned, 5G users play cloud games in larger extent than 4G users, but 68 percent of all cloud gamers are still on 4G and their level of network satisfaction is lower in comparison to 5G users. As many as 63 percent of those who are familiar with cloud gaming claim they would play more cloud games if 5G network coverage was expanded.
3. Established behavior. As many as 38 percent of the dropouts at the Action step claim they are already satisfied with their current gaming habits. This also supports the fact that two in three smartphone users see cloud gaming as a complement, not a substitute for their current video gaming habits.
4. Games. The fourth factor is that cloud gamers drop out because of the games which are included in the cloud gaming platform (36 percent). Cloud gamers feel that the platform doesn’t offer the right games, that there are too few genres or too few high-quality games included in the subscription.

Network experience impact on cloud gaming satisfaction

After going through the reasons behind dropping out at the very important trial step, it is also very relevant to highlight the reasons for being satisfied among those who continue to play regularly and to become an important ambassador for the technology.

A regression analysis shows that as much as 38 percent of the satisfaction from a cloud gaming session is explained by the network experience. Network issues have a clear correlation with satisfaction level. The fewer issues, the more satisfied with the session, and vice versa. Additionally, 37 percent is also explained by in-game possibilities, though this part lies in the responsibility of the cloud gaming platform, not the network provider.

The next step: How CSPs can impact the success of cloud gaming

CSPs are at a crucial juncture where merely acting as resellers of cloud gaming platforms is no longer sufficient. To truly capitalize on the burgeoning market, CSPs must transcend this traditional role and reimagine themselves as differentiated connectivity providers. This transformation involves not just a shift in services but also a strategic overhaul of their pricing models.

The one-size-fits-all approach to subscriptions, prevalent in many current models, limits the potential to cater to the diverse needs of gamers. CSPs should consider innovative pricing strategies that resonate with the varied gaming segments. For instance, more serious or professional gamers, who prioritize consistency in latency and game play dynamics, may find value in premium packages offering guaranteed performance levels. These packages could include features like enhanced bandwidth during peak gaming hours or prioritized traffic to ensure a seamless gaming experience.

On the other hand, casual gamers, who might be more tolerant of variability in gaming quality, could be better served with a more flexible, best-effort service tier at a lower cost. This tier could offer a basic yet satisfactory gaming experience without the premium features necessary for high-stakes gameplay.

By tailoring their offerings in this manner, CSPs can address the unique demands of different gamer segments, thereby enhancing customer satisfaction and loyalty.

Simply, CSPs could be active in all the customer journey; from creating awareness and interest for cloud gaming, to make sure the conditions are the best for consumers to consider trying cloud gaming. Security, with no risk of being hacked was mentioned as an important condition.

Also, the cloud gaming offering needs to be attractive, too, due to the potential cloud gamers, by offering a new smartphone that works well as a cloud gaming device, relevant data plans, so that potential cloud gamers don’t fear to run out of data playing data consuming cloud games, together with the robust network. It is also important that the CSPs somehow monitor the cloud gaming sessions to make sure there are no network issues for the cloud gamers to become this satisfied cloud gamer, and a true ambassador of the cloud gaming technology.

Despite barriers, smartphone users see a cloud gaming future

It is important to note that despite the challenges in making consumers satisfied cloud gamers, those who are familiar with the technology are relatively positive about cloud gaming’s future. But changes in current offerings must be made, as was earlier mentioned. And consumers agree that the transformation won’t happen overnight, it will be gradual: about half of them, 52 percent, who are familiar with cloud gaming, believe that cloud gaming will replace traditional video gaming.

However, there is a significant group of smartphone users (34 percent) who think that cloud gaming won’t be replacing consoles, and instead co-exist with them. Also, attitudes can be linked to smartphone users´ personal gaming plans, since most smartphone users (57 percent) are willing to give up their next investments in gaming devices, like consoles and gaming PCs, and instead purchase cloud gaming services.

Empowering cloud gaming with Ericsson’s innovative 5G software toolkit

The data shows there are clear areas where CSPs can impact cloud gaming interest and retention by improving perception and experience, and Ericsson’s new software toolkit is a game-changer for the cloud gaming journey. It strengthens 5G Standalone network capabilities and enables premium services with differentiated connectivity, which is particularly relevant for the need to move cloud gaming from a best effort to QoS offering.

The fast speeds, consistent low-latency, and greater bandwidth of 5G are key enablers of experience-focused use cases like cloud gaming. The growth of these advanced and diverse use cases puts higher requirements on the network to deliver guaranteed QoS.

Guaranteed service-level-based QoS for cloud gamers is achieved through a combination of network components including massive MIMO, Advanced RAN Slicing, Time-Critical Communication, on-demand network APIs, and 5G Core for the full standalone experience.

The performance of these components can be enhanced through Ericsson’s software toolkit, ensuring a superior network experience for mobile broadband services such as mobile cloud gaming.

Sibel Tombaz, Head of Product Line 5G RAN at Ericsson, emphasizes that Ericsson is reshaping connectivity and facilitating a seamless transition from ‘best-effort’ mobile broadband to premium experiences with service-level agreements. The new software toolkit empowers customers to unlock advanced 5G applications through differentiated connectivity.

Methodology for the biggest cloud gamer study

The target group for this study was smartphone users on 4G and 5G, aged 16-69 years, across 37 selected markets. The study has employed both quantitative and qualitative data collection. The qualitative part of the study with these individuals was based on a strategic sample from several criteria to ensure the participation of the right individuals. This part of the survey was conducted with one-hour in-depth interviews on Teams with five heavy gamers living in the US and the UK who play regular video games and cloud games on multiple devices.

The quantitative part of the study was conducted with a sample of between 1000 and 2000 individuals from each of the 37 markets, covering five continents. The data was collected by gathering responses from a 25-minute-long online questionnaire. These samples represent a population of approximately 650 million consumers worldwide.

Target group:
Smartphone users on 4G or 5G, aged 15-69 years, across 37 markets

Sampling:
1000-2000 randomly selected individuals from each of the 37 markets

Data collection:
25 minutes online interviews with screened individuals from pre-recruited Internet panels during 2022.In-depth interviews with five heavy gamers during 2022.

Representativeness:
Insights representing 650 million consumers worldwide

Source: Ericsson ConsumerLab, 5G: The next wave and cloud gaming, 2022

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