Asklemmy

The lag has several components. Input lag between the peripherals and your computer, the network transmissions to the server, the regular rendering of the game, live transcoding the game, the network again, decoding the stream on your device. The rest are pretty much insignificant.

The biggest way to reduce lag I can think of is if the server is literally in your city, and the connection between it and you have the least amount of nodes between you and the server. Some video streaming services will partner with ISPs to put their servers in the same place to reduce overhead and improve the user experience. I'd assume that gaming would benefit from that too, but this is harder to implement since.

Another way to improve networking lag is by prioritising game streaming data over other data, QoS (quality of service), is really important both for the home network and on the ISP side.

This should be obvious, but don't use a VPN.

For the video transcoding, it can be pretty quick, but having dedicated hardware like NVENC would be faster than using the CPU, not just in terms of FPS, but also in latency if given the same FPS (through FPS cap).

Higher FPS. The more frames per second, the lower the input lag, though it only matters if you eliminate network lag first.

I should mention that I have never used any game streaming service, and I don't have the equipment to test lag either.