Publishers: Calculate Your All-in Costs To Run Cloud Gaming Infrastructure

Do you want to know how much it would cost to deliver games you’ve developed via the cloud? Access the cloud gaming calculator after filling in this form to analyze the overall costs on AWS. From there, you can change the assumptions, add your games, and see how much it would cost your studio to run your own cloud gaming business.

In 2018, Morgan Stanley released a major report claiming that Cloud Gaming would dramatically reshape the gaming industry. In this report, MS claimed that publishers going direct-to-consumer with cloud gaming could gain an incremental $24 billion of gross profit by 2025. The opportunity was clearly articulated: build cloud gaming infrastructure on top of public cloud companies and disintermediate the console players circumventing their 30% licensing fees. An additional benefit that may have been overlooked, but is nearly as important in the era of monetizing a smaller number of titles for longer through engagement and DLC is owning data on customers. With a direct-to-consumer model, the publishers gain deeper insights into their customers’ behavior before and after purchases. On top of these, cloud gaming is also an opportunity to monetize a back catalog of games that may not receive the attention it still deserves. With that being said, although cloud gaming has the potential to revolutionize the gaming industry, there are significant infrastructure costs that give platforms (Nintendo, Xbox, and Playstation) and public cloud companies (Amazon, Google, and Microsoft) a cost and scale advantage. Even if publishers don’t develop their own cloud gaming products (although we believe they should and will), publishers could still benefit in the scenario where the platforms or infrastructure companies dominate cloud gaming. In the early years, the best content will have an opportunity to sell lucrative licensing deals as platforms fight for the best content. This, however, may turn out to be a siren song once the platforms the hold the keys to dominating the next distribution channel and eventually commoditizing the majority of publisher content.

Building a direct-to-consumer cloud gaming product is expensive today with infrastructure costs eating a significant amount of revenue earned. Costs will come down in the long run and owning the customer relationship will be extremely valuable into the future. As of now, the best option for a publisher is to develop their own platform on the back of a public cloud provider’s infrastructure. With the Parsec SDK, there are several opportunities for cost savings through multi-tenancy, headless game launching, and Linux hosting.

Using the Parsec SDK’s game mode, a game developer can run multiple versions of their game on one virtual machine and stream that to thin clients. Headless hosting is possible because the game can run as a background process while outputting frames directly to the Parsec Host functionality. With this mode, a game developer can also take advantage of Linux hosting opening up significant cost advantages such as per second billing, no Windows licenses, and increased virtualization. Using the headless Game Mode through the Parsec SDK on a Linux machine increases multi-tenancy possibilities tremendously as well — this is the most significant cost saver reducing the amount of hardware required. In addition to this, Parsec can monitor the resource usage on each cloud machine and intelligently spawn resources in AWS or assign the next instance of your game to a VM hosting another customer seamlessly.

With that Parsec SDK mode enabled, a publisher or developer can run as many games per instance as resources are available. In the hypothetical case where Destiny 2 is running on a g4dn.12xlarge instance in the Amazon US-East (Ohio) region, Bungie could have 9 instances of the game running on one virtual machine. This would bring the hourly price per game instance down to just $0.26 per hour on a Reserved Instance. Once data transfer costs are added, the all-in AWS cost would be about $0.36 per customer per hour. Taking advantage of the spot market could bring this price down further. With that, if the average cloud gaming customer plays for 20 hours in a month, the infrastructure would cost about $8.19 per month on AWS.

Destiny 2 is a demanding game, so it would require a lot of resources. If, however, a developer were looking to monetize a back catalog of games, they could run a lot more games per instance and bring the total cost of infrastructure down even more.

Destiny 2 is a free-to-play game, so it may not work well as a standalone game on the cloud. With a $60 purchase price, Red Dead Redemption 2 may be a better example on the economics of the cloud versus the traditional go-to-market strategy on the consoles. The infrastructure and software costs would be approximately $11.65 per month. That’s about 20% of the total price of the game. A game developer might be able to justify that if it’s expanding their overall market, but it’s still too expensive against paying a flat 30% fee to a console maker without further monetization opportunities due to increased engagement via an always accessible game.

Google is building a platform for cloud gaming with Stadia

Game developers are releasing their own cloud gaming platforms today because they’re trying to capture a greater percentage of a consumer’s overall gaming consumption. Game publishers have priced their subscription packages to capture the entire average annual spend of a typical consumer of premium AAA games. At $180 per year, UPlay+ and Origin Access are attempting to monopolize all of the money a consumer generally spends ($179/year) on premium content. It’s a great move, and if the publishers can deliver it from the cloud, they might have an opportunity to disintermediate the powerful console platforms.

As of this month, developers can license Parsec’s SDK for cloud gaming and many other use cases. Read more about licensing our technology here, and analyze how much it would cost a publisher to run a cloud gaming business on AWS here.