Google Stadia Going After the Recreational Multiverse

Up to now, the video game market has been to a large extent spared by the great wave of dematerialization that has disrupted all cultural and creative industries over the course of the past decades. Other than a vast movement of consolidation through mergers and acquisitions, the distribution model and the actors in place had not yet experienced their “Netflix moment.”

With Stadia, a cloud-based gaming service that uses the streaming feature developed for YouTube, Google is kicking the creative hive and the impacts, although they remain unknown, will certainly transform this young and effervescent industry.

The cloud and the end of ownership

Several observers have stressed that Google’s announcement of Stadia foreshadowed namely the “end of ownership” of video games. It’s an argument that has often been invoked and that has yet not prevented platforms such as Spotify and Netflix to record significant growth.

However, law professor Aaron Perzanowski, author of The End of Ownership, points out in Variety that, contrary to linear content such as music, cinema and television, by definition, video gaming involves an “appropriation” (of the avatar, the level of progress) by the player. Should Stadia eventually cease its activities, that would cause a prejudice to the platform’s clients.

Moreover, Stadia is not the only commercial offer in this universe. Indeed, it competes against Microsoft’s xCloud and Sony’s PlayStation Now services. Contrary to Google, the latter offer the advantage of being established brands in the gaming field. Let us also recall that, at a time when the video game market crosses paths with the hosting market, Microsoft’s cloud-based offer has a market share of more than 13% compared to approximately 6% in the case of Google.

These objects that will no longer be

Along with the development of its virtual arena, Google announced that it is establishing its own creation studios. The news follows the announcement by Google of the hiring of Jade Raymond to the position of vice-president. Raymond was successively producer of Assassin’s Creed and general manager of Ubisoft’s Toronto-based studios as well as EA Games’ Montreal-based studios.

Although this new player may eventually increase the competition in the gaming world, the creation of new AAA franchises—i.e., games with high production and promotion budgets—may take anywhere from three to eight years and there is no guarantee of success whatsoever.

We will also need to closely follow the reaction of publishers such as Nintendo, Activision, EA and Ubisoft, which could—or not—make their titles available through this streaming platform.

If the design and publishing of video games risk evolving, it’s especially with respect to the hardware that the most fundamental changes will occur… or not. From the outset, at the time of its announcement, Google recognized the necessity of an ultra-high-speed ubiquitous Internet network to ensure a latency-free streaming platform.

Indeed, contrary to the consumption of linear video content, the interactivity of video games presupposes an instant responsiveness between the player’s input and the visual output. Several analysts have indicated that, without a massive deployment of the 5G network—and it is estimated that it is not before anywhere between 2023 and 2025 that 30% of the population will have access to this technology—additional hardware will be required to operate the service.

The issue of the subdivision between games designed for consoles or PCs and mobile games also arises. Up to now, this subdivision was in part the result of a fragmented market, differentiated products and devices of very different capacities and uses. According to this boundary, the nature of the games, how they are distributed and the strategies used to monetize them may be very different.

With the exception of a few games including Fortnite, the vast majority of the products developed over the course of the past ten years were designed for one or the other of these platforms or for Nintendo’s Switch platform—a “hybrid” console that is equipped with an external controller.

While they wait for this total ubiquity, existing players will most probably proceed prudently. PlayStation and Microsoft have both announced their upcoming—and maybe last—generation of consoles, i.e., the PS5 and Xbox Scarlett respectively. They are both scheduled to launch in 2020. In doing so, both of these companies signal that streaming, despite its revolutionary potential, is maybe not quite yet at our doorsteps.

Francis Gosselin
Francis has a doctorate in economics and is a multipreneur. Associated with the Sage Consulting Group since 2018, he is also the president of Norbert Hill and chairman of the board of directors of FailCamp, an NPO dedicated to promoting entrepreneurism and apprenticeship. He has worked as a consultant in the fields of education, media, real estate and financial services for clients such as Ubisoft, École des sciences de la gestion (ESG UQAM), Radio-Canada, Lune Rouge, BNP Paribas, Allied Properties and the Institut de Développement Urbain. He is a staunch believer in the virtues of social and philanthropic engagement, sits on the board of directors of the MUTEK Festival and is a member of HEC Montréal’s Club of 100 young philanthropists. Since 2012, he raises MIRA dogs for the benefit of people in need and contributes financially to this important cause.
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