Post by Mark N. Vena.
Google formally took the wraps off its new gaming platform,Stadia, last week at GDC 2019. The phrase “game changer” is thrown around too often in the tech space, but in my view, Stadia really does have the makings to profoundly change the video game entertainment landscape. The Entertainment Software Association reports that in the United States consumers spent nearly $43.4 billion in video game-related content (hardware, software, peripherals and subscriptions) in 2018—over three times what they spend on music or movie tickets. It’s no wonder why Google is jumping into the gaming market in such a high-profile manner.
The gaming segment has always been limited to those who can afford it. Video game consoles, like the multiple iterations of the Sony PlayStation and Microsoft XBOX, require consumers to purchase expensive hardware. PC gaming setups are even more expensive, with users often spending $1,500 or more for top-flight systems. The category is ripe for disruption and market expansion, if the Stadia platform can deliver on the promises made at GDC.
Stadia’s mission is to move gaming processing from local hardware in the home (consoles/PCs), into the cloud. People tend to call this “game streaming” but that’s misleading—the very nature of gaming requires bidirectional activity (traffic that moves in the opposite direction at the same time, which tends to create latency). It’s more accurate, in my view, to characterize Stadia as “cloud gaming.” This is not a trivial undertaking, as it requires enormous processing power. Google’s partnership with AMD (for its graphics processor technology) will play an enormous role in delivering the type of robust gaming experience that gamers demand. Google went out of its way to claim that Stadia runs at 10.7 GPU teraflops, which is more than Sony PS4 (4.2 teraflops) and XBOX One X (6.0 teraflops) combined. These shockingly powerful performance numbers will, in theory, allow Stadia to deliver the type of genuine multiplayer cross-platform functionality that has eluded most console and PC platforms.
Putting Stadia’s impressive on-paper technical specs aside, it’s worth noting that great gaming content has always been at the heart of both the console and PC gaming experience. In that respect, both Sony and Microsoft have clear advantages with their legacy relationships with many leading gaming studios (if not outright ownership). One of the biggest challenges that Google faces with Stadia is that games must be coded specifically for the platform; it may take lots of time before the most popular games show up on the Stadia menu. That being said, Stadia utilizes the popular Unity engine and Epic has created the required tools for its Unreal Engine. When Stadia goes live later in 2019 (Google did not commit to a specific date), the combined Unity and Epic game developer duo should provide a reasonably large number of titles for users to dip their toes into Stadia’s waters.
Other questions still loom. What type of wireless broadband performance will be needed to provide a pleasingly latency-free experience? With 5G and its promise of high broadband performance coming soon to the consumer space, how does Stadia perform outside of the home? Finally, how much will the subscriptions cost? Consumers are already showing signs of “subscription fatigue,” and discretionary dollars for a new gaming service platform may face stiff competition. Google played coy with these questions during last week’s event and withheld a good deal of information typically provided at a launch (such as pricing, and what games will be available). I almost got the feeling that Google rushed this launch event in order to pre-empt Arcade, Apple’s big gaming service launch. The answers to all these questions may very well determine how much traction the platform gets when the service goes live later this year, so I’ll be watching closely for more details.
Stadia has an enormous opportunity to expand the multiplayer gaming experience to a much wider mainstream audience than the cost-prohibitive console and PC gaming desktops/portables serve. Stadia may also very well benefit from the e-sports phenomenon, with online wagering set to kick into hyperdrive later this year. The bottom line is that if Google pulls this off—and Google has the technical arsenal, resources, and scale to do so—we could be at the cusp of a complete disruption of the gaming space. Sony and Microsoft should take heed.
Mark N. Vena is a Moor Insights & Strategy senior analyst covering the smart home, home automation, security, and console gaming.