Cars have been the stars of video games since the beginning. Now video games are becoming a star attraction in cars. Eyeing the broader social impact of technologies such as high-speed connectivity and high-definition screens, and the trend towards semi-autonomous driving and shared mobility, automakers are building their next-generation vehicles with gaming as a core part of the in-car user experience.

Why are automakers so upbeat about in-car gaming? A recent industry report suggests the global gaming industry is poised to maintain its recent rapid growth and is on track to reach $321 billion by 2026. And then there's this: There are about twice as many gamers worldwide as there are vehicles on the road. For automakers, this translates into a lucrative opportunity that readily aligns with their focus on generating recurring subscription-based revenue streams.

Robust low-latency 5G networks allow gamers to connect internet-enabled cars to digital game stores from anywhere. Cloud gaming platforms are allowing users to enjoy high-quality, lag-free experiences without the need for huge and expensive hard drives. With compatible infotainment systems and powerful graphics processing units (GPUs), high-caliber 3D gaming engines are rendering in-car gaming experiences at par with home gaming consoles.

While games are already being played in many vehicles (mostly Tesla) and money is being made mostly at the distribution level (subscription packages from Holoride are a proof), the in-car gaming market will remain nascent in the short term - with more buzz than meaningful business potential for most developers. Bespoke automotive gaming experiences are still many years away, but the in-car gaming platforms previewed at the CES clearly hint at what these products might look like.

Can the car be an ideal game console?

The short answer is, yes. Many modern cars already have a lot of physical systems that can synchronize with a game's VR features. Many tactile and sensory effects can be achieved and blended with what is going on in the virtual game environment.

For example, warm or cold air could stream out from the ventilation nozzles, an on-screen explosion could be intensified by sudden activation of the seat heating, and the seats could shake abruptly, and the seat belt tensioner tighten up if a gamer bangs into a wall virtually. Additionally, vehicle scenting could be used to infuse the vehicle's interior with appropriate aromas — gamers will smell fresh grass when they cross a meadow, for instance, or the stench of burning rubber on the racetrack.

For now, however, unless the vehicle has screens in the rear passenger area, or a front screen that can mask content from the driver (as in the new Mercedes-Benz E-Class), gaming is currently something only possible while the vehicle is stationary. In the medium- and long-term, the highly automated vehicles of the future will allow everyone inside the vehicle to indulge in gaming experiences at their leisure.

AirConsole in-car gaming in the 2024 BMW 5 Series

Source: BMW

In-car gaming market trends

In-car gaming platforms and consoles are being actively showcased by original equipment manufacturers and suppliers alike. CES 2023 in Las Vegas was filled with examples of car-related gaming products and services. A quick review of the unveilings:

• The Sony-Honda joint venture Sony Honda Mobility revealed the Afeela EV prototype, which will incorporate technology from Epic Games' Unreal Engine. The company's Unreal Engine 3D tool was also featured in Volvo's battery-electric EX90 SUV. Stellantis highlighted the Ram 1500 Revolution BEV Concept featuring two 14.2-inch touchscreen displays that can be combined or used separately as a video game controller.
• On the supplier side, NVIDIA revealed its GeForce NOW cloud gaming service, with Hyundai, BYD and Polestar working with the company to integrate the same. The GeForce NOW client for automotive can run on Android- or browser-based in-vehicle infotainment systems, including an app to easily select and launch games.
• Visteon showed its fourth generation SmartCore cockpit domain controller that supports multi-display entertainment and gaming, and Garmin demonstrated its 'Unified Cabin' concept with an emphasis on technologies that unify multiple domains, touchscreens, and wireless devices on a single system-on-chip (SoC) - with wireless gaming controllers from Atari.
• ThunderSoft revealed the E-Cockpit 7.0, its seventh-generation cockpit product, with upgraded computing power and enriched user experience for applications such as immersive cockpit games.

Teraflops and gigabytes

Tesla has a team of software engineers in Seattle working on video games, and more recently started building a similar team in Austin. The company added an Atari video game emulator using an over-the-air (OTA) software update back in 2018, followed by the launch of the 'Tesla Arcade' in-car gaming platform in 2019. One of the first successful implementations of gaming built into a car, the user interface allowed users to play games through the car itself rather than using a third-party handheld console. Tesla's racing game, "Beach Buggy Racing 2," allowed the on-screen action to be controlled with the car's steering wheel and pedals.

In 2021, Tesla equipped its Model S and Model X vehicles with an AMD APU processor and a discrete RDNA2 GPU for graphics, resulting in up to 10 teraflops of computing power, with Elon Musk comparing its capabilities to Sony's PlayStation 5. The following year the cars were integrated with Valve's Steam, an online video game store and distribution platform. With 16 gigabytes of RAM available, Steam integration means users of the 2022 or newer Model S or Model X have access to thousands of games.

At the 2019 Mobile World Congress, Mercedes-Benz demonstrated a CLA coupe featuring SuperTuxKart — an open-source variant of a classic Nintendo game — which was playable on the large Mercedes-Benz User Experience (MBUX) infotainment system screen. Ambient lighting and interior airflow changed according to the game environment. Thanks to a collaborative deal between Mercedes-Benz and Faurecia in 2022, the latter's Aptoide automotive app store will bring Rovio Entertainment's popular slingshot game Angry Birds to the new 2024 E-Class' MBUX Hyperscreen infotainment system.

Audi's move into in-car gaming started in 2019 when it spun out Holoride, a startup that combines Extended Reality (XR) technologies with real-time vehicle data, resulting in a virtual space where riders can enjoy interactive and passive content that reacts to both them and the motion of the car. Holoride technology is based on HTC's Vive Virtual Reality (VR) platform and works with the Vive Flow headset, which wirelessly connects with a vehicle's infotainment hardware. Select Audi models featuring the third-generation modular infotainment toolkit (MIB 3) and the latest software cluster offer Holoride-capability for rear seat passengers.

Holoride's aftermarket retrofit device, which can render any vehicle game-ready, provided the user has a subscription to the Holoride platform, was launched for $199 at CES 2023. The basic subscription costs $20 a month or $180 yearly. A $799 package includes the retrofit hardware, an HTC Vive Flow headset, a one-year Holoride subscription and a safety strap. Currently, Holoride users can only play "Cloudbreakers: Leaving Haven" from Schell Games, the studio that brought "Among Us" to VR.

BMW announced a partnership with gaming platform AirConsole in October 2022 and launched the new 5 Series with the AirConsole app in May 2023. Drivers or passengers will be able to play games while the vehicle is stationary. All they need is their smartphone, which will act as a controller, and the BMW Curved Display. The connection between the smartphone and the vehicle is intuitively established by scanning a QR code on the Curved Display, and the AirConsole app supports multiple players. AirConsole will be available on the 7 Series and X5 and larger SUVs, as well the iX and i4 models, by September this year.

Lexus unveiled in 2021 the Gamers' IS vehicle designed by the Twitch community in which LED panels projected content onto the rear window. The car featured a custom-built gaming PC installed in the vehicle's trunk. The gaming system on the passenger's side had haptic feedback in the seat and a high-definition curved monitor, along with a retractable keyboard and mouse platform, and a 3D-printed game controller.

Mainland China's BYD has received a graphical user interface (GUI) patent, which can be used to connect the steering wheel or controller with in-car games based on the vehicle system. It is also working with NVIDIA to bring GeForce NOW cloud game streaming to its vehicles.

In-car gaming revenue dynamics

The in-car gaming market is creating exciting collaboration possibilities between automakers, game content developers, software companies, AR and VR players, and chip companies, among others.

Automakers typically partner with a gaming distribution platform to make some or all of their content library available in their vehicles. For example, Tesla has a deal with Steam to make Steam Deck games available within Tesla Arcade. Either the games are free to use (like AirConsole games inside BMWs) or users need to log into their existing Steam or GeForce NOW accounts to play games they have already purchased.

AirConsole's parent company N-Dream has a subscription revenue share model for developers to create games exclusively for AirConsole. While BMW pays N-Dream a recurring fee to offer AirConsole games in its cars, AirConsole remits some of this back to its developers.

Looking to the future, while automakers are currently looking to use in-car gaming to differentiate themselves via third-party licensing deals, they will eventually have to produce exclusive native content for the strategy to work effectively.

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This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.