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Google Stadia: Cloud gaming's bellwether, for better and worse

Google Stadia: Cloud gaming's bellwether, for better and worse

This week in Protocol Gaming, your weekly guide to the business of video games: Google Stadia loses more talent and its fate remains uncertain, supply shortages for the PS5 to persist until 2022 and E3 signs up more developers to revitalize its video game expo after last year's COVID-19 cancellation.

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The Big Story

Google Stadia is now the cloud gaming bellwether, for better and worse

In trying to make a point in court, one of the lawyers in the ongoing Epic v. Apple antitrust trial decided to throw Google Stadia under the bus.

"Would you consider Google Stadia to be a failed attempt at a streaming app?" lawyer Katherine Forrest, representing Epic, asked Apple App Store VP Matt Fischer last week. She was trying to establish that Apple's restrictions on cloud gaming may have contributed to Stadia's failure. "I don't know enough about the current state of Google Stadia to make a definitive statement about that," Fischer replied. "I've heard they've had some struggles."

It was a public bruising for Google's cloud gaming platform, but Forrest appeared to be slightly misinformed on the facts; Stadia closed down its in-house development studios in February, but the product is still live. The message was still loud and clear, however: Stadia's reputation is that of a service that might as well be effectively dead. The reality — that it might be on its way to the grave — isn't much better.

  • The health and eventual fate of Google Stadia has become a topic of great speculation in the game industry. That's partly because Stadia is acting as a bellwether for cloud gaming as a business, representing both the tech industry's relatively newfound interest in owning a slice of the ever-growing gaming market, and the difficulty and cost of operating such a platform before the industry might be ready for it.
  • If Stadia does indeed shut down, it will confirm the doubts of many Google detractors who have long suspected the service is just one of many the search giant's fleeting side projects it sinks money into only to retire to the Google Graveyard.
  • Left in the lurch will be players who have sunk their time and dollars into the Stadia platform, only to see it one day evaporate with no easy consumer remedy outside full-scale refunds.

The bad news for Stadia keeps piling up. Last week, a series of LinkedIn job updates revealed that Jade Raymond, the former head of Stadia Games and Entertainment, had hired away at least a half-dozen Stadia employees for her new Haven game studio. (Granted, these were employees hired for game development, and Google wound does those efforts in February. The closure coincided with Raymond's departure.)

  • John Justice, the head of product at Stadia, also left the company, according to The Information. As of Monday, Justice had updated his LinkedIn profile to indicate he has taken a job as a vice president at Facebook, though it is not clear if he's working on Oculus or any game-related product or division.
  • Stadia now has lost its in-house development chief, its head of product and the general manager of its now-shuttered Montreal studio all within the last two months. The current most public-facing executive at Stadia is game industry veteran Phil Harrison, who has given sparse public updates or interviews regarding the platform since launch.
  • In a statement, a Google spokesperson tells Protocol, "We have a lot in store for Stadia going forward. Recently we've introduced new games to the platform (FIFA, DIRT5, Judgment, Resident Evil Village), added new games to Stadia Pro (Resident Evil 7, Trine 4 & Star Wars: Jedi Fallen Order to name a few), and we continue to work on pushing out platform updates like the features we recently revealed that are coming soon. Plus, we'll be bringing Stadia to Chromecast with Google TV to give players access across more screens and devices."

Many of Stadia's struggles can be traced back to its business model. Stadia requires that consumers treat it as a full-fledged platform, just like console and PC, and charges full price for new games you can only play on its servers. That's been a hard sell for consumers who've been accustomed to treating cloud gaming as a complimentary add-on, if they've used the technology at all.

  • The closest analog to Stadia so far has been Xbox Cloud Gaming (previously known as xCloud). Microsoft took a wait-and-see approach and has kept its platform in a loose beta state since launch last year. It's also used its existing Xbox Game Pass Library to bypass the business model issues Stadia has run into.
  • There's also Nvidia GeForce Now, which lets you play games you already own. And Amazon Luna gives you a bundle of games to play as a part of a channel subscription, like a cable TV package. That may make those services more attractive in the long term, and therefore more viable as businesses.

Stadia's path forward might be as a service provider for other companies. Without exclusive games or anything else to make it unique, the company's path forward seems most promising on the infrastructure side. There, Google can provide access to its server technology, scale and the existing feature set of Stadia to game developers and publishers or other cloud gaming providers. But that would mean figuring out the fate of its consumer-facing business, and what happens to all those games that exist only in the cloud that could one day disappear.

Update May 11th, 4:05PM ET: Added statement from Google.

Overheard

  • "It's just a banana, ma'am." —Epic Games's marketing VP Matthew Weissinger is given a chance to defend the anthropomorphic Fortnite banana known as Peely while testifying on Monday, after Apple's counsel insinuates the naked banana is too inappropriate to show in the courtroom.
  • "I promised I would never do that to her again, and started looking for positions outside Irrational … I made a promise to myself, as a producer, that I would never do that to a team." —Video game producer Mikey Soden speaks out on Twitter about the hardships his significant other, family and friends experienced when he was part of the team crunching to finish BioShock Infinite. The title, developed by the now-defunct Irrational Games, is the subject of one portion of Jason Schreier's new book, "Press Reset," that was featured as an excerpt in Polygon.

A MESSAGE FROM MASTERWORKS

When it comes to sources we trust, the masterminds at Harvard are certainly up there… so when they say that at least 20% of your portfolio should be invested in a mix of alternative assets, we're inclined to listen. Meet Masterworks, your passport to the contemporary art market, where prices crushed S&P returns by 174% from 1995–2020. Protocol Gaming Subscribers can skip their 20,000 person waitlist with the special link below. *See important information.

Learn more

Lootbox

  • On Protocol: A group of PlayStation owners have sued Sony, alleging its restrictions on digital purchases have artificially inflated digital game prices. The lawsuit touches on many of the game distribution issues currently being litigated in Epic v. Apple.
  • Zynga acquires Chartboost for $250 million, in an effort to beef up its ad game. Chartboost, which specializes in mobile marketing and monetization, could also help Zynga offset some of the effects of Apple's recent IDFA privacy change.
  • The PlayStation 5 will be hard to find until next year. According to comments made from Sony CFO Hiroki Totoki following its most recent earnings report, Sony doesn't anticipate supply catching up with demand until 2022, The Verge reported. It expects to ship 14.8 million PS5 units this fiscal year.
  • E3 is starting to look normal again. The video game expo, which was canceled in 2020, is still all-virtual this year, but it has in the past few weeks signed on close to a dozen major game and tech companies to participate.
  • The Nintendo Switch is still crushing it on all fronts. Nintendo posted its fiscal 2020 earnings last week, with lifetime Switch sales of 84.6 million units and a 44% year-over-year quarterly increase. The Switch is now approaching the Wii's 101.6 million unit record.
  • Riot Games is getting into mobile esports. The game developer says it will launch a League of Legends: Wild Rift esports tournament in late 2021, a sign of confidence for the competitive mobile gaming market.
  • Even Walmart wanted in on cloud gaming. The retailer's unannounced cloud gaming service was referenced in court documents submitted as part of Epic v. Apple, with Walmart executives pitching Epic on the platform to get Fortnite on board.
  • Patent trolling strikes the game industry. Clash of Clans maker Supercell and parent company Tencent have been ordered to pay $92 million, Bloomberg reported, for infringing patents related to freemium games owned by a company called Gree Technology. Gree sued in the jurisdiction of Marshall, Texas, known for its plaintiff-friendly patent verdicts.

Look Out For


Sony may be close to spilling new PSVR 2.0 secrets

Sony has shared new details about its upcoming virtual reality headset for the PlayStation 5 with select partners, according to a new report from UploadVR. That includes the resolution of the device (reportedly 4000×2080 pixels, or 2000×2040 per eye), eye-tracking to enable foveated rendering and talk of a motor inside the headset for haptic feedback. So far we've only seen the device's new touch controllers, but partner discussions may mean an official reveal is on the horizon.

A MESSAGE FROM MASTERWORKS

When it comes to sources we trust, the masterminds at Harvard are certainly up there… so when they say that at least 20% of your portfolio should be invested in a mix of alternative assets, we're inclined to listen. Meet Masterworks, your passport to the contemporary art market, where prices crushed S&P returns by 174% from 1995–2020. Protocol Gaming Subscribers can skip their 20,000 person waitlist with the special link below. *See important information.

Learn more

Thanks for reading. Tell your friends and colleagues to subscribe here, and send tips, feedback and ideas to nstatt@protocol.com. See you next week.

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