Much of the gaming experience is out of Google’s control
This week at the Game Developers Conference in San Francisco, Google officially introduced its cloud-based streaming platform. Called Stadia, the service allows developers to build new games that can be streamed across devices rather than played on dedicated gaming consoles or PCs.
Like most streaming services, Stadia is device-agnostic, so any game can be played on most smartphones, tablets, PCs and TVs through the Chrome browser as long as a robust Internet connection is available. Google also launched its own game controller, which creates a console-like gaming experience for various devices. Google now makes gaming hardware.
The announcement marks Google’s first major foray into the billion-dollar gaming industry and pits the company against Amazon’s Twitch as a main cloud destination for gaming. It will also go up against Microsoft, Nintendo and Sony in this space, companies that have long had a lock on this industry. Google already has a significant presence in this area through its Play store, one of the most popular gaming marketplaces. But mobile gaming is a relatively casual experience, and Google hasn’t attacked the lucrative hardcore gaming market, which still runs on devices like Sony’s PlayStation 4 and Microsoft’s Xbox or high-end PCs. With Stadia, Google is aiming to bring more complex games as well as more casual titles to a wider variety of people.
The traditional video-game industry has been going through a shift similar to the one in other content businesses such as video and music: it’s evolving from physical hardware and games to digital downloads and streaming. But streaming requires a constant solid Internet connection and more computing power given the real-time interactions between the player and the game.
An important advantage for Google is that it has an existing infrastructure to support this service, with data centres around the globe to power the system, using an architecture like that of edge computing, moving the computing power and content as close to users as possible. Specifically, Stadia runs through Google’s YouTube video streaming platform and taps into the company’s extensive network of data centres. This is an overlooked part of the business case behind Stadia. Although it has put a lot of money into the service, Google is widely using substantial existing capital expenditure in Google Cloud. So not only does Google benefit from a robust infrastructure of data centres and its network investment, but it also has an immediate advantage over contenders. The company plans to pour $13 billion into US data centres alone in 2019, up from $9 billion in 2018.
Google will rely on publishers and game developers to provide many of the game titles for the platform, but it’s also creating exclusive content through its own studio called Stadia Games and Entertainment. Google is becoming a game publisher, building on its experience as one of the major investors in Niantic, the company previously spun out of Google that developed Pokemon Go.
The concept of gaming-as-a-service isn’t new. OnLive tried and failed years ago and was arguably well ahead of its time. The service was shuttered in 2015 and assets sold to Sony Entertainment. Sony and Microsoft have both released platforms that directly stream games to consumers through their respective consoles. Sony rolled out PlayStation Now in 2014 and Microsoft announced Project xCloud in October 2018. Nvidia also has GeForce Now, which is being repositioned to be sold through service providers alongside the company’s RTX server infrastructure. Indeed, SoftBank and LG Uplus announced this week that they will deploy RTX servers with GeForce Now in 2019 (see Instant Insight: Nvidia GPU Technology Conference 2019).
This is further evidence of the looming importance of 5G to game streaming. We predict that a host of mobile operators will seek to position their networks as the answer to the latency problem by putting servers closer to users at the very edge of the network. The form this takes will be fascinating to watch, as some are likely to take a more direct role in the same vein as SoftBank and LG Uplus. Others will make their “edge cloud” infrastructure available to third parties including cloud providers and streaming services.
It’s clear that streaming is the future of gaming, but Google may have accelerated this change with Stadia and it’s not known how far Sony and Microsoft have come building out their infrastructures. Google’s existing data-centre infrastructure gives it the edge here, although Microsoft also makes extensive use of content delivery networks for its own services, and Sony and Nintendo are large customers of public content delivery network provider, Akamai.
There are disadvantages to relying on an Internet connection for playing games. Google says its remote computing power beats that offered by the latest game consoles. But this is theoretical, and the experience will only be as good as the quality of a user’s uplink and downlink. Stadia promises to stream games in up to 4K at 60 frames per second — Google hopes to increase this to 8K at 120 frames per second in the future. With this resolution and heavy action games, latency and connection disruptions of any kind, which are out of the control of Google, will dilute the experience. Latency is the enemy of gamers but a big opportunity for companies that can address the challenge.
Google is certainly looking to the future when 5G connectivity becomes widespread. In many ways, with its high throughput and low latency, 5G was designed for a service like Stadia, and gaming could be a major use for this next generation of networks. Stadia could also be a boost to smartphones designed for this segment, like the Razer Phone, with impressive graphics capabilities and beefed-up hardware specifications. Mobile devices featuring 4K displays could also become more popular.
Google didn’t discuss the general business model behind the service and didn’t offer details about pricing. It’s unlikely that users will be able to play games for free that they’ve paid for on other platforms. Stadia will launch later in 2019 in the US, Canada, the UK and Europe. The natural question is “sticking” power, considering Google’s track record with initiatives such as Google+ and Allo. Game streaming is becoming highly competitive well ahead of the supporting infrastructure reaching maturity. This means that Google’s investment has to be viewed as long-term. Google has the assets to be successful, but its appetite for a long-term commitment is undoubtedly the biggest uncertainty.
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