Today marks the launch of Google’s Stadia. A lot of people have asked me for my thoughts on Stadia’s chances for success, so I figured I would write them down here. Time will tell if I am right or not.
While I think cloud streaming technology is promising for a number of reasons and we have made investments in this space at Samsung NEXT Ventures, I think Stadia likely has a difficult road ahead of it.
Who is Stadia really for?
At its core, Stadia feels like a solution in search of a problem. Cloud streaming is certainly compelling technology, but what problem does it solve for the consumer? Perhaps cost of owning a gaming PC? It turns out building a reasonably performant gaming PC that can last for a few years is not all that different than purchasing cloud streaming. For many gamers, building a PC (and customizing it with LEDs, liquid cooling and more are all part of “being a gamer.” So maybe Stadia is for a different demographic? A new gamer who is discovering gaming for the first time? Perhaps, but these gamers are unlikely to care about graphics performance and probably have a persona that is most similar to a casual mobile gamer. As a result they are more likely to play games in a social setting and care more about them being accessible and easy to “snack” on. These types of games don’t seem like the type that Google is marketing for Stadia’s launch nor are they the type that benefit from cloud streaming.
Content is still king in gaming and Stadia doesn’t have much to differentiate.
Cloud streaming is a bit like video streaming in that it is ultimately a technology that enables distribution of gaming in new ways. Just as on-demand video streaming gave rise to a new crop of winners (most notably Netflix) what ultimately differentiates these video services is the content they provide to their users. Right now, the Stadia content offering is pretty limited (especially relative to other cloud streaming options such as GeForce Now). That could change over time, but my hunch is that even if Google makes content investments and keeps them exclusive to Stadia, this will require multiple years of continued investment (given the development timeline of many AAA titles) and thus not be something Google is prepared to sustain given any hiccups they encounter along the way.
So where is the opportunity in cloud streaming?
So if I’m bearish on Stadia, then why do I think cloud streaming i an interesting technology? Well for one, I think there is an interesting opportunity in developing new games that couldn’t exist prior to the advent of cloud streaming. This could be because they require the underlying compute power of the cloud or because they require a single instance of the game running on a server somewhere (something that a massively multiplayer game might require). Cloud streaming games could also reduce things like cheating in games (many first person shooters for example rely on the client to perform certain game logic, which can be “faked” or exploited more easily).
Ultimately, cloud streaming is also a new distribution mechanism and therefore has the ability to act as a portal to new experiences inside games from anywhere on the internet. For example, it could be leveraged in livestream situations to hop into a game instance with a streamer you’re watching. This has been touted as a part of the Stadia/YouTube integration, but we haven’t seen it in the wild yet and it’s been employed as a pretty sterile way of reinforcing Google’s view of the world.
Ultimately I do believe there is a large scale startup opportunity in the area of cloud streaming, but any successful company probably needs to both nail the content piece of the equation as well as the distribution piece of the equation to deliver something more novel to consumers than just “get the same games you play today but via a different mechanism.” Or simply start by offering a compelling tool to game developers building new experiences (similar to what Parsec does).
That’s about it for my thoughts today on Stadia and cloud streaming - it will be fun to revisit this post in years to come to see whether I was right or not!