Cloud Gaming: Why It Shouldn't Be Considered a Distinct Market

The primary objective of this analysis is to challenge the classification of cloud gaming as a distinct, standalone market within the context of antitrust investigations, specifically regarding the Microsoft and Activision Blizzard merger. The central thesis posits that cloud gaming is a distribution method rather than a separate market, rendering the regulatory concerns regarding its competitive impact speculative and ill-founded.

The analysis categorizes cloud gaming into four distinct service models: features integrated into larger bundles, platforms requiring specific game purchases, complements for existing game libraries, and business-to-business input services. Because these models serve different functions and lack significant overlap, they cannot be aggregated into a single, clearly defined market. Furthermore, the analysis highlights that consumer demand for standalone cloud gaming services remains low, as evidenced by the failure of several dedicated platforms. Consequently, the presence or absence of exclusive content is unlikely to materially alter competition within these varied service types.

The scope of this assessment is focused on the United Kingdom’s Competition and Markets Authority (CMA) regulatory proceedings during the 2023 investigation period. The findings are based on a formal submission to the CMA by Joost Rietveld, an associate professor at the UCL School of Management. By identifying the inherent difficulty in defining video game market segments, the analysis concludes that the cloud gaming theory of harm is insufficient to justify blocking the merger, as the industry landscape is too complex and fluid to support such narrow regulatory definitions.