Cloud gaming is no longer just an experiment, it’s a rapidly growing part of the industry. A new report from 80 Level and Room 8 Group dives into this trend, highlighting how cloud, user-generated content (UGC), and artificial intelligence (AI) are reshaping game development and distribution.
Titled How UGC, AI, and Cloud Are Transforming Gaming, the report draws from interviews with nine industry experts across cloud services, game development, and publishing. These include Benjamin Paquette, Yann LeTensorer, and Guillaume Carmona from Room 8 Group; Shayan Sanyal from AWS; Scott Reismanis from mod.io; Daphne Parot from Blacknut; Manolis Emmanouilidis from Arcware; and Jan Sechovec and Štěpán Kaiser from Revolgy. For cloud gaming, the message is clear: it’s expanding fast, but it’s also facing real-world challenges that could slow its momentum.
While services like Xbox Cloud Gaming, GeForce NOW and Blacknut are more capable than ever, they still rely on infrastructure that varies widely by region. Gamers are more familiar with cloud-based access and subscriptions now, but expectations have also grown. The tech has to work well, not just in perfect conditions.
So, can cloud gaming scale to meet global demand? Or will infrastructure, latency, and cost keep it from becoming the go-to way to game? This article looks at what the report says about where cloud gaming stands today and what might shape its future. Let’s jump in!
The Numbers Behind the Boom
Asia-Pacific leads adoption, accounting for 37% of paying cloud gaming users in 2023. That share is expected to grow further by 2026. While North America and Europe are expanding more slowly, usage continues to rise across the board.
The draw isn’t surprising. Cloud gaming has always promised instant access without expensive hardware. What’s new is how far platforms have come. Services like Xbox Cloud Gaming, NVIDIA GeForce NOW, and Blacknut have expanded libraries, improved device support, and optimized performance. These subscription models fit cleanly into gamers’ habits, especially for those juggling multiple platforms.
Latency and Infrastructure Challenges
Cloud gaming is growing fast, but it’s still held back by one big issue: performance. The 2025 report makes it clear that latency remains one of the biggest obstacles. Even as more people try cloud gaming, the experience isn’t always consistent.
A solid internet connection is essential. In some places, that’s still a big ask. If your connection drops or slows down, the whole game can fall apart. That’s a dealbreaker for anything that relies on quick reflexes. If you’re curious, here’s how to check where your cloud gaming server is located so you can better understand your connection quality. Fighting games, shooters, or competitive racers often feel off unless the connection is perfect. While 5G is helping in some regions, it’s not available everywhere yet.
“There’s a huge gap between what cloud gaming promises and what it delivers in high-performance scenarios. Until we solve that with better infrastructure, it won’t be a reliable option for everyone.”
Yann LeTensorer, VP of Technology at Room 8 Group
Infrastructure is another sticking point. Cloud gaming depends on having nearby servers that can manage load and reduce lag. That kind of setup takes time and serious investment to build. Not every region has the support it needs to deliver a consistent experience.
Running games in the cloud also isn’t cheap. Some experts say AI might help optimize infrastructure and lower costs. Smarter routing, predictive load balancing, and resource management could reduce strain and improve speed. But those improvements will take time.
Right now, cloud gaming works best in ideal conditions. It’s great for turn-based games or slower experiences, but it can still struggle with fast-paced action. Until performance improves across the board, it’ll remain an option, not the standard.
B2B First, Then B2C
One of the more interesting takeaways from the report is how cloud gaming might grow. Not through consumer adoption first, but through business use. Several experts believe the real opportunity right now is in B2B. That means cloud tech being used behind the scenes for demos, early access, QA testing, or developer tools.
It makes sense. The infrastructure for consumer cloud gaming still has a long way to go, but studios and publishers can already benefit from using it internally. They don’t have to worry about public infrastructure or end-user internet speeds. Instead, they can focus on streamlining pipelines and getting feedback earlier in development.
Even Google Stadia, before shutting down its consumer-facing platform, tried to pivot to a B2B model called Immersive Stream for Games. It aimed to license out its cloud streaming tech to partners and publishers. While that move didn’t save Stadia, the idea itself still holds promise. Amazon has also moved in this direction. Its new GameLift Streams lets developers stream games directly to gamers via WebRTC, helping them build their own cloud platforms without relying on storefronts or modifying game code. With the right infrastructure and partnerships, cloud tech could play a big role behind the scenes.
Once those tools are refined, the report suggests that cloud gaming could gradually scale to B2C. But it won’t happen overnight. As long as latency and access remain inconsistent across regions, a full consumer push just isn’t practical. Gamers expect reliability. If cloud services can’t deliver that every time, it’s tough to build long-term trust.
Still, the potential is clear. Cloud gaming opens the door to try-before-you-buy models, subscription bundles, and instant onboarding. Imagine clicking a link and jumping into a game without a download. That changes how games are shared, marketed, and discovered.
For now, though, cloud gaming’s next leap may happen behind the scenes, before it lands fully in the hands of everyday gamers.
What the Road Ahead Looks Like for Cloud Gaming
The 2025 report from 80 Level and Room 8 Group paints a clear picture. Cloud gaming is growing fast, with more users, rising revenue, and expanding services. But it’s also running up against familiar roadblocks. Latency, infrastructure, and cost are still real challenges that can’t be ignored.
What’s encouraging is that the momentum hasn’t slowed. More studios are experimenting with cloud tech behind the scenes. Developers are testing early builds over the cloud, publishers are exploring scalable demo delivery, and internal tools are already changing workflows. That’s likely where cloud gaming will continue to gain ground in the short term, quietly powering the industry from the inside out.
As for widespread consumer adoption, that’s still on the horizon. But if cloud services can keep improving and become more stable across regions, the shift could be closer than expected.
This is just one piece of the larger conversation. For more insights from the report, check out our breakdown on how cloud gaming is converging with UGC and AI, and another on how Gen Z and Gen Alpha are shaping the future of play.
What’s your take on where cloud gaming is headed? Are you already using it daily, or still waiting for the tech to catch up? Let us know in the comments. This is just one piece of the larger conversation. As cloud gaming grows alongside UGC, AI, and changing gamer habits, there’s a lot more to explore in how the industry is evolving. We’ll be covering more of these topics soon, so stay tuned.
As always, remember to follow us on our social media (e.g., Threads, X (Twitter), Bluesky, YouTube and Facebook) to keep up with the latest news. This website contains affiliate links. We may receive a commission when you click on these links and make a purchase, at no extra cost to you. We are an independent site and the opinions expressed here are our own.
