5 reasons why Google will dominate the next generation of gaming
After Google struggled to make an impact with its YouTube Premium music subscription service last year, will it do any better with its recently announced gaming platform, Stadia? This time the answer is yes. Not only will Google find traction in a very competitive segment, but it should dominate the $135 billion industry at the expense of Microsoft, Nintendo and Sony.
Here are the five reasons Alphabet’s Google
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will win the gaming war.
1. Consoles are the past; streaming is the future
Ever since games stopped being sold on DVDs, the days of the console have been numbered. Why do you need a dedicated device to play a game when you already have high-powered devices like computers, phones and TVs all around the house?
Even today, most gaming occurs on PCs (think Fortnite) and phones (like CandyCrush) rather than on game consoles.
The three biggest incumbents — Sony
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Microsoft
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and Nintendo
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— have been slow to give up the console for obvious reasons. First, they are hooked on the revenue they receive from proprietary hardware and game sales. Second, they benefit massively from the lock-in effects that consoles provide. In a world without consoles, this effect will be harder to create; switching platforms will be as easy as a click on a browser. Google can be bolder because it has no legacy to cling to.
2. Gamers are already using YouTube
Google doesn’t need to convince gamers to come to its new platform for a simple reason — they are already there. YouTube is currently the dominant platform for sharing gaming experiences: 200 million people log into the platform daily to watch gaming content, and Google estimates that more than 50 billion hours of content were watched by gamers in 2018.
The company plans to integrate Stadia into YouTube, so that posting videos of game play will be seamless. It will also allow gamers watching videos on YouTube to start playing a game at the precise point being shown on the video. There is no new software to download and no new interfaces to learn. Stadia will be instantly familiar to them.
3. Game developers will welcome more choice and better developing options
Most of today’s most popular games aren’t produced by the gaming platforms (Microsoft’s Xbox, Sony’s PlayStation, and Nintendo’s Switch). They are written by independent game studios with names like Activision Blizzard
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, Rockstar and Epic. These studios are likely to welcome Google’s entry into the gaming world, as another platform will mean more competition for titles and potentially more gamers, and thus more revenue.
Plus, Google’s server-side approach will allow developers to make changes on the fly rather than having to wait for the next hardware release. Improvements in Google’s platform can go live instantly, and developers can take immediate advantage.
4. 5G will change the game
Google’s Stadia has two requirements: a device running its Chrome browser, and an internet connection. To fully benefit from Stadia’s capabilities, that connection better be fast. Since the computational heavy lifting is done in the cloud rather than on the device, slow connections will significantly degrade the gaming experience. This is bad news for gamers not fortunate enough to have lightning fast connections or those living far away from a Google server farm.
However, 5G will change all that, as bandwidth will no longer be a limiting factor. Simply put, in a 5G world, streaming game platforms will win, and Google is getting a head start.
Read: These 7 tech companies are today’s 5G winners
5. Users are loyal to games, not game systems
Game platforms like Xbox and PlayStation have largely failed to negotiate exclusivity for games beyond their internally developed titles. The most popular games, like “Grand Theft Auto,” “Overwatch” and “Call of Duty,” are available on multiple platforms.
Today, it is a lot more important what game you have, not what game system.
What could go wrong?
Google does face a couple of major hurdles. Bandwidth limitations is one of them. Until 5G is widely available — probably not until mid-2020 — it will need to work with existing connection speeds. For example, it will need to develop clever compression algorithms. A game that doesn’t run smoothly is a killer.
Another hurdle is Google’s still-thin game portfolio. The initial two games won’t cut it with gamers. The company needs to make deals with the largest games publishers to transfer their most popular titles onto the Stadia platform. Plus it will need to develop a whole raft of new titles, and fast. A great platform without great games is going to be doomed from the start.
For Google, the potential benefits from gaming extend beyond revenue and profit from the games themselves. A gaming subscription service could help to build a community that could be leveraged for other purposes, like Amazon.com has found with its Prime service. Tie-ups with Stadia-optimized hardware devices such as phones, tablets and PCs could benefit Google’s struggling hardware divisions. Ad revenues from YouTube could boost the bottom line.
The financial and strategic benefits for Google are significant, but it will need to move quickly. Existing gaming platforms won’t sit on the sidelines and watch their lucrative markets disappear, and new players, like Apple, Tencent and Amazon, might enter.
However, if Google plays its cards right, its future in gaming is bright.
Michael Wade is the Cisco Chair in Digital Business Transformation at IMD Business School in Switzerland. His latest book is “Orchestrating Transformation: How to Deliver Winning Performance with a Connected Approach to Change.”
source https://newsslap.com/2019/04/02/5-reasons-why-google-will-dominate-the-next-generation-of-gaming/
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