Why Can't Cloud Gaming Catch On?

Facebook is shutting down its mobile gaming app, and saying goodbye to many of its short-lived cloud gaming services.

Facebook is sunsetting its standalone gaming app in October, just two years after bringing it to market.

As its gaming app fizzled, Facebook slowly integrated many of the app’s features—such as gaming livestreams and some cloud-based games—into its primary app, which remains one of the most popular downloads across all of iOS and Android.

Facebook Gaming has clearly found its spot as a platform for livestreamers, but what about the rest of what the Facebook Gaming app offered?

Launched in October 2020, the Facebook Gaming app wasn’t just intended to be a competitor to Twitch or YouTube as a content platform. It also very notably included cloud gaming, allowing users to play many games—including “Dirt Bike Unchained” by Red Bull, “Asphalt 9: Legends” by Gameloft, and others—right from their phones.

High-end video games on mobile? Not the most novel idea. But somehow in the past few years, many companies have sold themselves on cloud gaming being the future. Not just startups, either, but the likes of Google, Nvidia, Amazon, PlayStation and many more. Cloud gaming has repeatedly failed to catch on, though, despite mobile gaming’s continuous rise among consumers.

Thank you for reading The Jacob Wolf Report. This post is public so feel free to share it.

In theory, cloud gaming should be successful. The cost to entry is relatively low—Google Stadia costs nothing for computer users and just $119 for Chromecast and a controller if players want to play on a TV. A subscription runs $10 per month, and other games are about the same cost as they are on console. On Facebook’s service, most games cost nothing. That’s compared to $500 for a PlayStation 5 or Xbox Series X, and $300 for a Nintendo Switch.

So what has been behind the non-existent adoption?

For starters, the U.S. is full of issues with wide access to broadband.

In a 2020 data report from HighSpeedInternet.com, costs per megabit ranged from $0.63 at the lowest to $7.84 at the highest across the 50 states. Cloud gaming requires, generously, a minimum of 25 megabits per second, meaning costs across the U.S. range from $15.75 a month for that speed to $196 a month.

But in that study, more startling than the costs is where the highest prices are centralized. While the four most expensive states are in the American West (Wyoming, Montana and the Dakotas), other parts of the country aren’t immune.

Virginia has an estimated $6.74 per megabit cost ($168.50 for 25 Mbps) and Alabama ranks ninth, with a $5.82 per megabit cost ($145.50 for 25 Mbps). Twenty-one states ranked above the average of $3.91 per megabit ($97.75 for 25 Mbps).

That makes cloud gaming unattainable for hundreds of millions of people.

Since the COVID-19 pandemic took hold in early 2020, the U.S. government has tried to offset the cost of broadband as the consumer number for it has increased.

In May 2020, Congress enacted the Emergency Broadband Connections Act of 2020, giving up to $50 in subsidies to those affected by COVID-related economic strains. In late 2021, the government replaced that with a long-term program, the Affordable Connectivity Program, giving Americans who receive Federal Pell Grants for college or are a part of other government assistance programs such as SNAP or Medicaid, $30 per month in a subsidy.

But it has not been enough, and the programs can be slightly difficult to apply for.

As of February 2022, the ACP registered only 10 million Americans; 42 million were participating in SNAP as of August 2021, according to NPR. More than 81 million participated in Medicaid as of May 2022.

The other factor at play is advertising.

Anecdotally, cloud gaming has been marketed primarily to the hardcore consumers—often the people who have the means and are willing to invest in high-end gaming computers or top-of-the-line consoles. So cloud gaming is more a novelty than a necessity. I don’t recall, even when many of the services—like Stadia, Facebook’s Gaming app, Nvidia GeForce Now, or any of the others—launched, much advertising was aimed toward the consumer that needs it most: The ones who can’t afford those big-ticket items.

The Jacob Wolf Report is a reader-supported venture. Free and paid versions are available. The best way to support us here is by taking out a paid subscription. 

An early 2022 estimate, given Google has not published the numbers, is that roughly 2 million people signed up for Stadia, and it’s likely many of those accounts aren’t active. By the end of 2020, the service had around 750,000 monthly active users, and as a result of its lack of success, Google slowly started to pivot away from the service, according to Business Insider in a February 2022 report. Facebook’s numbers have not been published.

It’s safe to say right now that there is not a sustainable market for cloud gaming.

So how is that disconnect fixed?

It starts by increased broadband, a clear agenda item for the Biden-Harris Administration, who’ve committed funds to high-speed Internet expansion in several different bills over the past two years. But it also comes with a computing challenge—developing truly enticing gaming experiences without requiring users to pay for a $500 console or a $1,000+ gaming PC.