Internet-streamed video games will reach a global market value of US$38,000 million by 2035, according to a study by Bloomberg Intelligence. That financial expansion threatens to displace traditional home consoles as a mass-consumer product.
How Cloud Infrastructure Drives the Shift
Nathan Naidu, an analyst at Bloomberg Intelligence, stated in the report that the proliferation of artificial intelligence and data centers dedicated to cloud computing will accelerate the global reach of game streaming while improving profit margins. Artificial intelligence plays a dual role in this transition. The technology helps lower operational costs while supplying the underlying infrastructure needed to run streaming services.
Advertising will emerge as a primary growth driver by the early 2030s, allowing operators to reach users in emerging markets. Microsoft Corp., Nvidia Corp., and Tencent Holdings Ltd. stand to benefit significantly from their existing investments in cloud infrastructure, according to the report.
We have a huge pivot underway here at Epic, moving developers around to retool for maximum AI acceleration.The aim isn't to do the same stuff with fewer people, but to enable everyone here to build MORE and BETTER stuff, and to bring the benefits to all teams using Unreal.
Microsoft maintains a market share near 40 percent with its Xbox Cloud Gaming service. That platform registered roughly 220 million hours of streamed gameplay during the September quarter. Meanwhile, Nvidia holds a technological advantage through GeForce Now thanks to its graphics processing units, which serve workloads for both artificial intelligence and 3D rendering. Tencent is considered a technology leader within the Chinese market.
| Company | Strategic Asset | Market Position |
|---|---|---|
| Microsoft Corp. | Xbox Cloud Gaming | Near 40 percent market share |
| Nvidia Corp. | GeForce Now and GPUs | Technological advantage |
| Tencent Holdings Ltd. | Ecosystem integration | Technology leader in China |
Why Traditional Consoles Face Marginalization
Traditional living-room hardware will likely be relegated to a minority market segment as cloud platforms expand. As artificial intelligence increases software complexity, the demand for more powerful local hardware will be met more efficiently by streaming content directly from remote data centers rather than manufacturing new physical consoles every few years.
Nathan Naidu wrote that hardware for gaming is steering toward a smaller audience of dedicated enthusiasts. Consoles will remain relevant for passionate players seeking top-tier performance and for collectors, much like vinyl records endure for music fans. However, the hardware shifts from being the primary gateway to gaming to becoming just one of several access points.
Nintendo Co. has treated game streaming as a secondary consideration in its corporate strategy, leaving the company poorly positioned for the upcoming shift. Sony Group Corp. appears better prepared due to its established PlayStation Plus ecosystem and the PlayStation Portal accessory for remote play.
The Impact of Artificial Intelligence on Game Development
Video games represent one of the economic sectors most exposed to artificial intelligence tools. The underlying technology used to build interactive software shares its core foundations with tools for artificial intelligence, and industry-wide cost pressures have pushed firms to reduce headcounts in pursuit of efficiency.
Tim Sweeney addressed these workforce shifts on October 12, 2026, when he explained that his company was reorganizing developers to optimize artificial intelligence acceleration. His company provides the Unreal Engine, widely used to create 3D games.
High demand for data center capacity has pushed computing prices upward. Nathan Naidu noted that the continued expansion of data infrastructure will generate a surplus of graphics processing units toward the end of the decade. That surplus should increase market competition and reduce computing expenses for cloud gaming operators.
