[TechWeb] Sept. 22, 2021 is a year for accelerated penetration of 5G. According to the semi-annual report just disclosed by the three major operators, the total number of 5G package subscribers of the three major operators reached 500 million, and the penetration rate of 5G users reached 30%.

If 4G brings short videos, then what will 5G bring fire?

Ten years ago, when 4G was not yet popular, people imagined that it would be faster to watch movies on the Internet on mobile phones. However, reality often does not develop according to people's linear thinking, and the most popular movie people watch on 4G is the "5-minute XX movie" on the short video platform.

Similarly, the 5G era is bound to produce a new species that is very different from the 4G era, and cloud games may be that new species.

Cloud game is an online game based on cloud computing technology. All the calculations in the game (including picture rendering, data synchronization, interactive logic, etc.) are carried out on the cloud server, and accept the player's input instructions through the Internet. at the same time, the final screen result after processing is displayed on the player's front-end device. In cloud game scenarios, users' game devices only need to have basic video decompression capabilities and networking capabilities, without any high-end processors or graphics cards.

Cloud game industry chain involves three main components: hardware, IP and platform. It includes game product developer, cloud game distribution operation platform, cloud game server provider, terminal equipment provider and cloud game promotion platform. From the perspective of business model, the current layout of cloud games by major manufacturers is mainly concentrated in three aspects: hardware manufacturers represented by NVIDIA Corp; cloud computing service providers such as Alphabet Inc-CL C and Tencent; and mainframe game developers such as Sony Group Corp, Microsoft Corp and EA.

Alphabet Inc-CL C launched cloud game platform Stadia as early as November 2019. Microsoft Corp, relying on its Azure cloud computing platform, launched cloud game service Project xCloud in September 2020. GeForce NOW launched by NVIDIA Corp in February 2020 accumulated nearly 10 million registered users in one year.

In China, the cloud game industry is on the eve of the outbreak. At present, the four important technical factors supporting cloud games are continuing to break through.

In terms of basic network, with the development of 5G technology, the price of optical fiber has dropped by 90% in 10 years; in terms of computing power, the new infrastructure will greatly increase the number and capacity of big data center and edge nodes; in terms of streaming media transmission technology, each upgrade of coding compression technology reduces bandwidth consumption by nearly 50%, and continues to iterate. In terms of hardware, the Moore's Law of the chip itself is constantly improving its efficiency, and the rise of domestic computing platforms will further reduce costs.

This series of breakthroughs bring about a continuous decline in the deployment cost of cloud games, and quantitative changes will eventually lead to qualitative changes.

The rise of cloud games, on the one hand, replaced part of the existing game market, on the other hand, brought a huge incremental game market.

The incremental market is reflected in the following aspects:

First, cloud games and live streaming, video and other integration into pan-entertainment streaming media, the interaction is greatly enhanced, becoming a new type of traffic portal and resulting in new traffic dividends.

Second, the threshold of cloud games is greatly reduced, there is no need to wait for download, no plug-in, no terminal restrictions to provide the highest picture quality and performance experience, is expected to further increase the game user base, improve users' willingness to pay, and expand the overall market scale of the game.

Third, the cross-platform distribution of cloud games makes heavy games migrate from PC and host to mobile, and TV and AR/VR have become a new battlefield to enhance the prosperity of the related hardware industry chain.

For domestic manufacturers, cloud games are also a feast not to be missed. China Mobile Limited launched cloud game platform Mi Goo Kuaiyou in June 2019. 16 months after its launch, the number of monthly active users has reached 37 million. At the end of 2019, Tencent successively launched two cloud game platforms: Tencent first Tour, which focuses on mobile games, and START, which focuses on PC host games. NetEase, Inc began public testing of NetEase, Inc cloud game platform in 2020, while Sheng fun Games jointly established China's first cloud native game studio-Jingyun Studio.

According to the forecast of China Mobile Limited Research Institute, China's cloud game market will be close to 70 billion yuan by 2025. Guiherme Fernandes, a market consultant at Newzoo, pointed out that the compound annual growth rate of China's cloud game market revenue from 2020 to 2023 will reach 135%, compared with the global figure of 101%, indicating that the market growth rate will exceed the global average.

To seize this huge business opportunity, in addition to excellent game content, but also inseparable from the low-latency user experience. If a user watches a live video for one second, it may have little impact on the experience, but the stutter of one second in the game can often affect the win or lose of a game, which puts forward high requirements for low latency.

The adoption of CDN has long been the basic method to reduce the delay in the game industry. CDN carries a series of instructions from game players, and the CDN node is closer to the terminal equipment, driving the network switching node to sink. In the era of cloud games, CDN not only deals with the game instructions of players, but also needs to render game pictures, which is undoubtedly a huge increment and a new blue ocean for the current tens of billions of yuan scale Chinese CDN market. Due to the requirements for computing power, the technical threshold of CDN has also been raised.

The global layout of 1500+CDN nodes by China's largest third-party CDN platform, Netcom Technology, has become a key help for the game manufacturers it serves to improve the user experience. With the arrival of the era of cloud games, Huang Shalin, vice president of Netcom Technology, believes that it is not advisable to simply pursue the scale of CDN nodes, and it is more important to upgrade CDN nodes and improve the computing power of CDN nodes to meet the needs of cloud games than scale.