Google Stadia: Technically solid, Commercially dead

I have tried out the Stadia Founder edition. Technically it ticks all the boxes, at least with a top of the line fiber connection. Commercially its current model seems dead on arrival and difficult to resurrect, given Google’s checkered track record with direct to consumer products. Regardless, I believe that Stadia will be seen as the starting point of the new “Age of the Edge”, in which the content you experience is finally decoupled from the hardware you own.

Cloud Gaming

Google Stadia is Google’s cloud gaming service. Cloud gaming is a new mode of gaming in which the game is not executed locally but rather streamed from a remote gaming server that handles all the processes. If this sounds like “Netflix for games”, you are on the right path. However, complexity is substantially higher. While a streaming movie is the same for everyone and doesn’t require server-side processing, a game has a unique state for each player. It also requires substantial interaction between the player and the gaming server, making the controller another additional barrier to consider. Finally, gaming is also much more computing-intensive than a movie, given that the stream needs to be generated algorithmically on the fly, and usually requires a specific type of computing infrastructure: Graphical Processing Units (GPUs).

Even given all these difficulties, cloud gaming has been around for a while, with many companies working towards the “Netflix for games” vision. Tech startups like Spain’s PlayGiga or France’s Shadow have been chasing the dream for more than 5 years and delivering workable technology for about 2 years. Tech players like GPU-giant Nvidia have also pushed forward for this category to emerge with pilot programs. Microsoft and Sony, the console leaders who have the most to lose have been ambivalent. Microsoft’s XBox Game pass for PC Beta shows what they could do, but they have fallen short of a TV compatible solution that would cannibalize their core console business. Steam, the behemoth of PC game distribution, has also been trying out options. And publishers such as Origin and Blizzard are moving towards Direct-to-Consumer.

I have tried many of these and they all work to a certain degree. Based on my experience I have come to think there are three key elements for a successful “Netflix for games” on TV:

• Streaming technology. Getting a virtualization technology that allows effective streaming of gaming without any perceived lag.
• User interface. Finding a controller option that allows managing the service and playing comfortably and at a cost-effective price.
• Commercial and business model. Providing good value for money in a package that takes care of both technology and content.

We will now look at Stadia on these three elements

Streaming Technology: Very Good

Stadia’s streaming technology works very well. This is not really a surprise, as the different game streaming solutions I have tried over time have worked and Google is a company known for superb engineering. Of course, I am lucky to live in one of the countries with the best fixed connectivity in the world and it shows. With my 600Mb low latency fiber connection in a major Spanish city, the experience on the Chromecast Ultra is perfect. You can’t tell that the game is executing somewhere in the Cloud. Destiny 2 shows extremely impressive graphics and no lag is experienced. I assume Google has a node very close to me so latency is probably in the 20ms range and it is not really executing in a remote Cloud, but rather fairly close.

Several of the reviews online have criticized Stadia for not being “real 4K” but just something very close. While this might be the case, I believe Stadia is good enough for most gamers and TV screens. Those who really care about the perfect image will stay with local hardware for some time anyway. Some reviewers have complained of an “extremely hot” Chromecast ultra, a problem I haven’t experienced yet. Google has also failed to deliver at launch many of the innovative functionalities that were promised such as “Crowd Play”, “Stream Connect” or sharing save data between accounts.

Things don’t work as well on other devices though. I have a low-end PC and there Stadia works in fits and starts on the Chrome browser. It probably has to do with Chrome itself and the Wifi interface getting overloaded but clearly the technology is not ready yet for any hardware. The Chromecast ultra at 79€ is very cheap for a console equivalent, although fairly expensive for an entry-level set-top-box or smart TV (equivalent to 30–40€).

For more remote locations and higher requirements, such as VR, I can imagine needing to deploy Edge computing solutions to lower latency further (to sub 10 ms). This shouldn’t be a problem as this will be available from telco operators over the next years.

So overall, the technology looks very solid and hopefully will progress to Excellent as the service is trialled at scale and optimized. 4K and 8K will be fully taken care of. Connectivity and latency shouldn’t be the problem as fiber becomes universal. Entry-level hardware will be eventually addressed.

User interface: Very Good

The user interface has been a very positive surprise for me. It took under 10 minutes to set up the whole of Stadia on my TV and my children are able to use it without help. The controller is rechargeable and based on WiFi, meaning it has fewer glitches than the typical Bluetooth alternatives. Getting Stadia on an off with the controller shows the power of Chromecast which natively communicates with the controller. Google has shown us how the TV gaming experience should work, and it is a substantial improvement on previous interfaces I have tried out.

Of course, there is a problem. The Stadia controller is $69, a cool 3.5x compared to your typical standard wireless gaming controllers, which don’t work with Chromecast Ultra. So a four-player game around the TV starts at over $350, which puts you in console territory anyway. A proprietary controller also represents a risky bet on Google’s direct to consumer efforts which have a chequered history.

Hopefully, Stadia will open up Chromecast compatibility to other standard controllers allowing to use one Stadia master controller along with cheaper controller alternatives. This would lower another of the important entry barriers for Cloud Gaming.

Commercial and Business model: Very Poor

The technology and the user interface have their blind spots, but are mostly ok. However, the service dies in terms of its commercial and business model. Google has a limited catalogue of games, around 40 compared to Microsoft Game Pass PC with 100. Within those, it has only a limited number of top titles. On top of that, and here comes the real problem, Google expects you to buy the titles at the full retail price just for Stadia.

A quick introduction to how the game industry works. There are literally tens of thousands of computer games, with Steam, the broadest catalogue service, having over 30.000 games. All these games are usually sold on a pay-at-purchase model, with prices very skewed between top of the line so-called AAA games (40–60€) and the rest of the catalogue (10–25€). Some companies have tried out a subscription model (most notably Blizzard with World of Warcraft) and in-game purchases (for example Epic Games’ Fortnite). Purchases are typically for the game on just one platform (e.g. PC or console).

Games have different behaviour from movies in terms of usage. While you typically just watch a movie or series once, a game can be played for a long time. Gaming studios typically aspire for “replayability”, with really successful titles like World of Warcraft or Fornite achieving hundreds or even thousands of gameplay hours. So game consumption is much more concentrated than video consumption. Players want “their titles” to be on the platform.

Google’s Stadia follows traditional industry norms, so it falls flat on a number of issues:

• Extremely limited catalogue. 40 titles compared to the 30.000+ games out there. Of course, if you are a Destiny 2 fan you will have your game, but they only address a very limited set of gamers. The catalogue can grow over time, but it will depend on Google’s capacity to build win-win relationships with publishers
• Buy for Stadia only. You will have to buy titles just for Stadia and you will be locked in, if Google is not able to develop it. Google is a newcomer into the gaming category and has a history of dropping or freezing things that don’t work. You might be left with hundreds of euros of purchases that only work on a dead service. It would be like having a collection of Laserdiscs or Betamax.
• No way to try out games. There is no way to sample games, so your only option is to spend 20–60€ directly in a game and see how it works in the platform and with the controller. This compares with services like Microsoft Game Pass PC which allows you to sample 100 games.

Taking all of this into account it would take a radical shift from Google to be successful with Stadia. It also plays to Google’s traditional weaknesses like partnering with others on an equal footing or creating attractive consumer proposition. It seems unlikely Google will be able to pull it off. Google Stadia’s technical infrastructure, however, might end up being an interesting proposition through Google Cloud. Game publishers need an infrastructure for the future and building it is not their core expertise, so using Google Cloud might be a viable option.