Google’s Stadia Is Latest to Target Untethered Streamed Gaming Business

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IL0402stadiaWith Google’s unveiling of its Stadia game streaming service at the Game Developers Conference this week, the search engine giant is making a play for a potential new age for gaming, free of dedicated consoles and PCs, but full of competitors. It comes at a time when the videogame business – whether as a platform for properties licensed from other media, or as a form of new IP that spawns merchandise, location-based entertainment and other revenue streams – is gaining a higher profile within the licensing business.

It’s also a time when other entertainment and even sports brand owners acknowledge that a big gaming success – think “Fortnite” – draws eyeballs and mindshare away from “traditional” entertainment platforms such as movie theaters, TV screens, stadiums and arenas. For example, in a letter to shareholders in January, Netflix maintained that “Fortnite” was more of a competitor for consumers’ screen time than HBO.

Stadia, much like services envisioned by Microsoft, Amazon, Netflix, Verizon and others, will rely on powerful computers inside data centers to stream game play, moving console-level 4K gaming online into a Chrome browser that can be accessed on devices such as smartphones, tablets and Internet-connected TVs.

Like Stadia, most of the other services are in their early testing stages and the real impact isn’t likely until 2020.

Amazon’s service isn’t expected to arrive until 2020, but Verizon’s service – Verizon Gaming — has been tested using a set-top box from Nvidia Corp. with 135 games (including the popular “Fortnite”), with plans to bring it to Android-based smartphones.

The challenges of any one streaming service being the videogames-equivalent of Netflix, are many. There’s a host of technical hurdles to be overcome by these prospective services, including the all-important issue of lag time – the time between pushing a controller button and seeing that reflected onscreen — in fast-moving competitive games.

Yet despite technical challenges, the allure to non-traditional gaming companies getting into the streaming business lies in the size of the potential market. The global videogames industry generated $136 billion in revenue in 2018 and is growing at a rate of 15% annually, according to the research firm IDC. And the expansion of videogames to smart phones, tablets and Internet-connected TVs makes the potential for cloud-based gaming enormous.

The videogames market, almost since Atari introduced the first gaming machines in the 1970s, has been dominated by console suppliers.  In recent years that has been Microsoft (Xbox One), Nintendo (Wii, Switch) and Sony (PlayStation).

Those legacy companies have migrated through a host of platform and business model shifts over the decades. Now they’re being faced with services that move the heart of gaming from the console to the data center.

The new competitors will be taking on not only console suppliers, but other streaming incumbents, including Sony itself. Valve Corp.’s Steam, launched in 2003 as a PC-based service had, as of 2018, 150 million registered accounts and was capable of handling 18.5 million concurrent users online. Sony’s PlayStation Now service, which it built through a series of acquisitions and launched in the U.S. in 2015, announced plans earlier this year for bring the service to Spain, Italy, Portugal, Norway, Denmark, Finland and Sweden. Microsoft also launched a beta of Project xCloud, the introduction of which is expected to coincide with a new Xbox console in 2020.

Game developers also are moving into streaming services. Epic Games, the publisher of the popular Fortnite title, has opened its own online store for streamed games, while Rovio is seeking investors for its Hatch Entertainment game streaming service that has emerged from a beta test and has been formally released in the Nordics, UK and Ireland. And Electronic Arts last May purchased the game rental service GameFly to get access to its streaming technology and by fall had announced Project Atlas.