Samsung to launch cloud gaming service for Galaxy users

Samsung Electronics Co., the world’s top smartphone maker, is set to unveil a cloud gaming service for mobile devices as it seeks new profit sources from its 1 billion Galaxy users amid stagnant growth in global mobile phone sales.

Cloud gaming, sometimes called gaming on demand or game streaming, is a type of online gaming that runs video games on remote servers and streams them directly to a user's device, or more colloquially, playing a game remotely from the cloud. 

Players do not need to install games on their hard drives or to match the hardware requirements for playing certain titles. The service also allows gamers to play their games across different devices and resume their progress, which is saved in the cloud, similar to streaming movies from Netflix Inc. Cloud gaming is convenient for people who want access to their games from anywhere, as well as those who can’t upgrade their game console or PC.

Samsung is testing a beta version of a cloud gaming platform for its Galaxy mobile devices including smartphones and tablets in North America with a plan to introduce the service later this month, according to industry sources in Seoul on Monday.

The platform will allow Galaxy users to more easily play games as the service will eliminate the need to download apps from Google Play and install them on their devices.

Samsung is in talks with global game developers to attract various famous titles to the platform. The South Korean tech giant is poised to offer the service to Galaxy customers for free, although users will have to pay publishers when they play top titles.

The platform is expected to help game publishers expand their customers base given the 1 billion Galaxy smartphones bought so far around the world. The game industry is also predicted to cut costs as Samsung reportedly plans to offer lower platform service fees to game publishers than those of Apple App Store and Google Play, which are up to 30% of users’ payments.

“It will be a win-win platform to both Samsung and the game industry,” said an information technology industry source in Seoul.

WELL-RECEIVED PILOT SERVICE

The South Korean tech behemoth is scheduled to unveil the strategy on the cloud gaming platform to global IT and game industry experts at the Samsung Developer Conference on Oct. 5 in San Francisco.

The company is working on an open pilot service of the platform in North America after starting a closed trial service in Canada earlier this year.

The pilot service was known to have been well received as users do not need to buy pricey video game consoles such as PlayStations and Xboxes to play popular games.

The talks with game publishers also reportedly went well as the platform is expected to provide additional sales channels to the industry.

“A study showed 90% of people exposed to games by ads were interested in those titles but did not download them because it was hassle,” said another IT industry source in Seoul. “Providing games in real-time through smartphones is expected to quickly increase users.”

STAGNANT GROWTH IN SMARTPHONE SALES

The move came as fears grew that Samsung will not be able to survive only with smartphone sales, industry sources said. Most customers with purchasing power have already bought smartphones since Apple Inc. introduced the iPhone in 2007, they added.

Growth in global smartphone sales has been slowing although major manufacturers such as Samsung and Apple launched new products with state-of-the-art performances every year.

Smartphone shipments were forecast to fall 6% to 1.15 billion units this year from 2022, a market analysis firm Counterpoint Research said.

The grim outlook caused smartphone makers to take advantage of the growing mobile game industry.

The global mobile game market size was estimated to be at $108 billion, more than double $46 billion of the home and portable console market and $40 billion of the PC sector, according to app analytics information provider data.ai.

Apple already launched Apple Arcade, a game subscription service with more than 200 titles – all without ads or in-app purchases.

Samsung is expected to cut dependence on smartphone sales and make stable profits by collecting fees from game publishers through the new cloud gaming service.

The company launched the Samsung Gaming Hub, a cloud gaming platform for smart TVs, earlier this year.

Samsung has already been enjoying revenue of billions of dollars from its smart TV platform service, according to industry sources. It receives fees from global streaming service providers including Netflix and Disney+ when customers use these services on Samsung TV.

Write to Jeong-Soo Hwang at hjs@hankyung.com
 

Jongwoo Cheon edited this article.