I can't really say, I'm using my external HDD to install games on my dad's computer(so they don't use his precious HDD space). With most games, I didn't recognize any problems, but since his PC is old, I didn't try any demanding games. I'd think the performance problems, if any at all, should be during loading times, once the data is in your RAM and/or temporary folder, there shouldn't be any big problems anymore. Just if the games reload a lot of data very often, there may be drawbacks, but I'd just try it.