Technology giants are trying to bring to videogames the same streaming capabilities that gave rise to Netflix and Spotify , a transformational leap that could usher in a new wave of growth for an industry bigger than Hollywood. Microsoft Corp. MSFT -2.09% and Alphabet Inc.’s GOOGL -2.06% Google recently announced efforts to let people play big-budget, visually complex videogames—so-called triple-A games—on internet-connected devices without requiring specialized hardware that costs hundreds of dollars. They join traditional publishers such as Electronic Arts Inc.EA -1.57% in a more than decadelong pursuit to stream triple-A games from the cloud to players anytime, anywhere.
That is critical to attracting players who don’t want to shell out for fancy PCs or consoles such as the PlayStation 4, Wall Street investors and analysts say. It could also lead existing players to engage more with—and spend more on—games, stealing away hours from movies, music and other media in the competition for consumers’ time. “This is going to be positive for gaming,” says Mark Demos, a portfolio manager at Foundry Partners LLC, which invested roughly 2.1% of its $11.3 million midcap-growth fund and 1.7% of its $8 million active-growth fund in Electronic Arts in late September. “The revenue pie probably will grow faster.” Game-software revenue rose 59% to $121.7 billion world-wide between 2013 and 2017, and this year is on track to reach $134.9 billion, according to industry tracker Newzoo BV. By comparison, spending at the box office and on home movie entertainment reached a global record of $88.4 billion in 2017, the latest data available from the Motion Picture Association of America show. Global recorded-music revenue, including streaming, was $17.3 billion in 2017, according to the International Federation of the Phonographic Industry. Streaming offers an opportunity “to reach a customer who isn’t perhaps as easily reachable today,” says Kareem Choudhry, corporate vice president of the gaming-cloud unit at Microsoft. Billions of people have internet access and “we know they’re not all going to buy a console,” he says.