Daily Telegraph UK

At the very heart of the $206 billion gaming market, the console wars have raged for decades.

From the febrile nineties face-off of Sega v Nintendo to the more recent three-way battle between Sony, Microsoft and Nintendo, the battle for supremacy under the television has driven video games to become the most valuable entertainment industry in the world.

There have been casualties along the way, but alongside the ubiquity of blockbuster PC gaming, consoles have been the industry’s great survivor.

Many predicted their downfall before this generation of hardware began in 2013, Sony’s PlayStation 4 and Microsoft’s Xbox One set to suffer in the face of the burgeoning mobile games market.

How quaint that seems now. While mobile gaming is a vast industry, making up 51 per cent of the global gaming market, console gaming has continued to flourish.

Sony has sold more than 91 million PS4s so far, surpassing the 84 million lifetime sales of its predecessor. And while Microsoft has lagged behind with an estimated 39 million Xbox One sales, Phil Spencer, the software giant’s gaming head, said Microsoft had its “highest revenue year last year, with over US$10b ($14.6b) in revenue in the gaming category”.

Nintendo, meanwhile, has found itself resurgent with the Switch console released in 2017, selling an estimated 20 million units globally.

So it seems the dedicated gaming console still has plenty of lives left, its ability to provide the biggest blockbusters – Red Dead Redemption 2, Assassin’s Creed and Call of Duty to name a few – undimmed.

But the latest threat to the console’s staying power is coming, with cloud gaming expected to soon take a foothold in the industry.

At its intended peak, cloud gaming will see the biggest blockbuster games streamed directly via the internet to any device – PCs, smart TVs, tablets and mobile phones. Much like what platforms such as Netflix have done for TV and film streaming, cloud gaming is looking to provide “triple-A” gaming experiences to any device, anywhere without the need to hook up a box to the TV.

While we are assured to have at least one more round of dedicated consoles, with both Microsoft and Sony confirming successors to the Xbox One and PS4 (likely to appear in 2020), the industry at large is readying itself for the possible disruption that mainstream cloud gaming will bring.

“We will see another generation, but there is a good chance that step-by-step we will see less and less hardware,” Yves Guillemot, the chief executive of Assassin’s Creed publisher Ubisoft, told Variety. “With time, I think streaming will become more accessible to many players and make it not necessary to have big hardware at home. There will be one more console generation and after that, we will be streaming, all of us.”

History is already marked by the failure of streaming devices such as the maligned OnLive. But this time the industry is more prepared and the technology more advanced. Some nascent or experimental services more suited to the challenge already exist. Nvidia’s GeForce Now is in beta, allowing players to stream games to PCs or Nvidia’s range of Shield tablets. Sony has a largely unheralded service already running called PlayStation Now, streaming a selection of PS2, PS3 and PS4 games to the PS4 itself or a PC.

Existing services are yet to have the full-blooded commitment that cloud gaming will need if it is to become a mainstream pursuit, with a limited selection of games and compatible platforms.

But in October, Microsoft revealed its own Project xCloud, a games-on-demand service that will leverage its existing cloud computing network Azure to stream triple-A games to any device. Microsoft said it will begin trialling the service in 2019.

And in quick succession, Google announced its intention to explore cloud gaming with its own Project Stream. Online retail giant Amazon is also reportedly set to launch its own game-streaming service by 2020.

In Japan you can also stream Odyssey and Capcom’s Resident Evil 7 to the Nintendo Switch.

With big players in the console wars, and seemingly new combatants too, already taking the battle to the cloud, it could spark a fundamental shift in how games are played.

But Microsoft said that it doesn’t see streaming as a replacement for consoles. “I believe there will always be an important role for the console in people’s gameplay,” Mike Nichols, chief marketing officer for Xbox, said. “We believe so much in consoles that we’ve launched two in two years and acknowledged that we’re working on another one. I think about streaming as complementary as it might reach people that consoles can’t or that the consoles aren’t appropriate for; if you don’t have the large TV or you don’t have much space.”

The current advantage for native gaming on consoles and high-powered PCs is that broadband and mobile network speeds are currently not up to the task of streaming triple-A games to the same standard. Feedback on Google’s Assassin’s Creed Odyssey trials has been good, but players wanting games at 4K resolution and the highest level of performance still need a premium console and ultra high-definition TV.

Perhaps more importantly there is also the issue of latency. When you are streaming a film or TV series on Netflix or Amazon Prime, small drops in your internet connection can lead to a pause or momentary lowering of the video resolution to compensate. For passive viewing this is a minor irritation, but for fast-paced interactive video games it could be crippling, with on-screen characters reacting too late to button-presses.

This is an issue that is challenging enough with home broadband, but with a peak 5G mobile network – which is necessary to provide cloud gaming at a high level on the go – not predicted to be in force until 2029, it could be a decade before cloud gaming is truly troubling the console.

But with firms such as Microsoft and Google already setting up the building blocks, we are likely to see an acceleration in the already apparent change in how games are provided and monetised.

Microsoft, somewhat wounded by the Xbox One’s market inferiority to the PS4 in this generation, has made huge strides in its subscription based model. For a monthly fee, its Xbox Game Pass service currently offers a solid catalogue of games. Most significantly, Microsoft has started making its blockbuster exclusives – such as Forza Horizon 4 and the forthcoming Crackdown 3 – available on Game Pass at release.

Of course, the implicit suggestion of streaming to multiple devices is that games will start to become more platform agnostic. This is something that perhaps suits a software giant such as Microsoft, but perhaps less so for PlayStation and Nintendo. But if that were the case, the winds of change may be hard to resist.

Even disregarding the advent of cloud gaming, games such as Fortnite have started breaking down some of the barriers between platforms. Fortnite allows players to carry their progress and purchases across platforms, be it PlayStation, PC or mobile phone, and to play with other players on different devices. Even Sony, a staunch holdout against cross-platform play, eventually bowed to the power of Fortnite.

These are the considerations that gaming companies must take into account when it comes to cloud gaming and the future of the industry. It may be a good decade away, but does this mean peace in our time and an end to the console wars?

Dedicated gaming devices have repeatedly managed to adapt to new challenges, but the disruption that this new technology will bring is likely to be fierce.