Cloud gaming market projected to reach $38 billion by 2035

A Bloomberg Intelligence report predicts that the cloud gaming market will reach $38 billion by 2035, potentially displacing traditional video game consoles as mass-market products. The study suggests that dedicated consoles may transition into niche products for enthusiasts and collectors, similar to how record players function today.

The shift is expected to be driven by advancements in artificial intelligence and the expansion of data center infrastructure. AI is projected to increase game complexity while data centers provide the necessary computing power more efficiently than periodic hardware generational updates.

However, the transition faces immediate economic hurdles. Current high demand for AI data centers has driven up the cost of computing power, and GPU prices remain elevated due to memory shortages. Analysts suggest that the necessary surplus of GPU capacity to lower operational costs for cloud gaming providers is not expected until the end of the decade.

Major players positioned to benefit from this shift include Microsoft, which currently holds approximately 40% of the cloud gaming market via Xbox Cloud Gaming, as well as NVIDIA and Tencent due to their significant investments in cloud infrastructure.