China hopes cloud gaming will spur demand for 5G

Tencent and Huawei’s cloud gaming efforts demand massive speed and bandwidth that 5G is ready to provide

Cloud Gaming

Josh Ye

Published: 12:24am, 15 Nov 2019

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This article originally appeared on ABACUS

China has been tightening its grip on gaming recently, going as far as putting a daily playtime limit of 90 minutes on underage gamers. But there’s one area that the country is particularly excited about: Cloud gaming.

Cloud gaming’s promise is why Microsoft, Google and Tencent are all diving in

Given that cloud gaming relies on a fast internet connection to bring PC-quality games to smartphones, it’s no surprise that some are eyeing it as the perfect application for 5G.

China is investing heavily in 5G. The country switched on its massive 5G network in 50 cities this earlier this month, bringing a massive upgrade in speed and bandwidth -- two things cloud gaming would benefit from.

Why 5G isn't just faster video streaming on your smartphone

“Following the arrival of the first wave of 5G, we are seeing one thing with the carriers. As its bandwidth massively expands, they are in desperate need of content to fill in the gap. The first thing they think of is gaming,” Zhihui Li, CTO at Huawei Cloud, said at the recently concluded GameDaily Connect Asia in Shenzhen.

While Google and Microsoft are pushing cloud gaming in the West, leading the way in China is Tencent and Huawei. Neither Chinese company has announced a consumer-facing product like Stadia or Project xCloud yet, but they are working on building out the infrastructure required.

We reached out to both Tencent and Huawei for comment, but have yet to receive a reply.

Tencent, China’s social and entertainment giant

Tencent is further along, having adapted many of its games and its partners to the cloud. But Huawei is a new player in the scene, having recently formed partnerships with gaming heavyweights like NetEase and Yoozoo. But it’s not just private companies: State-owned telecommunications giants like China Unicom and China Mobile are also working to port games onto their own cloud computing platform.

Nothing underlines the state-backed nature of China’s 5G push than this: Even the State Grid Corporation of China has been chipping in, turning electrical substations into hybrid datacenters to facilitate a variety of 5G and cloud computing uses, chief among which is cloud gaming.

It adds up to a strange dichotomy: Chinese regulators are seemingly trying to clamp down on gaming, but government officials have been quite supportive of the rapid development of cloud gaming.

Why China is the perfect place for cloud gaming to succeed

And it makes sense that China would have an interest in cloud gaming. The country has 459 million mobile gamers, and they have shown a preference for playing big, PC-like games on smartphones. After all, China is the country that pioneered the mobile battle royale, taking the giant and complex 100-player PC game PUBG and squeezing it on to smartphones in mere months.

PUBG, the battle royale pioneer

Cloud gaming will allow them to have those experiences without having to squeeze the game down to run or mobile hardware or require players to buy advanced smartphones. As long as they have 5G, they’re good to go.

“When it comes to mobile gaming, China, while it has a lot of users, is seeing a massive discrepancy in [the conditions in which] players play. We have a lot of users from fourth- and sixth-tier cities who are still using phones from three years,” Li of Huawei Cloud said.

In China, where you live determines the tech you use

According to a new iiMedia Research report, China is expected to have over 600 million cloud gamers by the end of 2023, with a market size worth more than 100 billion yuan (US$14 billion). But they won’t all be playing on phones.

Both Huawei and Tencent are looking into smart TV boxes, too. Li said that Huawei Cloud has been talking to Chinese telecom companies, which have become the dominant providers of TV boxes in Chinese homes.

“In the future, the main game distribution channels will reside in the TV boxes provided by carriers,” Li said, “Now seven out of ten people I talk to use TV boxes provided by carriers.”

Cloud gaming could also provide a huge jolt for China’s gaming industry, which has been facing sluggish growth. Tencent says the country’s mobile gaming sector is estimated to grow just 14% next year, down from a high of 101.7% in 2015.

As Google has shown in its attempts to get Stadia off the ground, cloud gaming is hard. But with a willing audience and a strong push from the government, China could be where it succeeds.

For more insights into China tech, sign up for our tech newsletters, subscribe to our award-winning Inside China Tech podcast, and download the comprehensive 2019 China Internet Report. Also roam China Tech City, an award-winning interactive digital map at our sister site Abacus.

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