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Will Google’s Stadia Revolutionize the Gaming Market?

Mar 21, 2019

On March 19, 2019, Google announced its entry into the gaming sector at the renowned Game Developers Conference in San Francisco with its new cloud gaming service, Stadia.  Google's entry into the already crowded gaming marketplace turns the traditional business model on its head.  Currently, in order to play video games, a consumer needs to purchase hardware (whether a console, arcade or computer) and the accompanying software (games). Google is answering the question that Netflix used to disrupt how we consume movie and television content and Spotify used to disrupt music consumption: Why do we need to own anything physical?

The idea behind Stadia is simple. A consumer can game on any device, from any location, at the highest resolution, and at any time without physically owning any peripheral hardware or software, except a controller.  All that is required is a high-speed internet connection to Google's cloud servers. The demonstration that Google presented at the Game Developers Conference showed integration with the company's flagship video platform, YouTube, whereby a consumer watching a video for a game could just click a “play” button and be immediately immersed into the action from the same device.

The idea of a gaming service that gives consumers unlimited access to a gaming library that can be played on seemingly any device from any location is a definite disruption to the current video game market. However, the conference still left some unanswered questions. Will it reliably work without connectivity issues? How will Google respond to similar offerings from competitors who have been entrenched in the space for years? What is the pricing structure?  While Google did indicate that the service would be available in 2019, no financial information was released.  Given the popularity in the marketplace for subscription services, it appears likely that Google will use that model.  Video games sell for around $60 each. So how does Google translate that into a monthly or annual fee?

It's logical that the video game market transitions into today's subscription-based streaming world.  And Google certainly has the resources to enter the gaming market.  If they can deliver the experience a notoriously fickle and loyal gaming consumer is looking for remains to be seen.

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Brett Vinokur

Brett Vinokur is an Audit Senior Manager with years of audit and accounting experience serving both public and private entities with a focus on sports and entertainment, manufacturing and distribution, and financial services.

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