Didn’t you hear? Google Stadia is dead. In news that will probably shock very few of you, Google has killed off its fledgling game streaming service, shortly after killing virtually all of its in-house content creation for the platform before.
Despite Google’s claims to the contrary, it was likely easy for the company to disable its rarely used streaming service. With markets as volatile as they are, many big tech companies are exploring ways to cut costs, freeze hiring, and ultimately save money. Google Stadia was probably the lowest rung on the ladder for this purpose and will free up valuable silicon for use in some of Google’s healthiest server-based businesses, like YouTube or Google Play.
As much as I appreciate the schadenfreude of seeing Google fail (my pettiness about blocking YouTube for Windows Phone will never end) it’s a shame for the engineers and creatives who made Stadia such a great product overall . And it really was a great product. For years it boasted much better latency and responsiveness than Microsoft’s Xbox Cloud Gaming, although the gap has narrowed in recent years.
Stadia was doomed from the start, and I think almost anyone who paid attention to it would have known that. Google wasn’t serious enough about acquiring content, and its insistence on Linux versions of games has effectively strayed from the essentials of modern game development. And they didn’t have an internal Windows translation layer like Steam Deck’s Proton to fall back on, although there were vague rumors that Stadia was working on something like that. Anyway, it seems to have arrived too late for the service.
With Stadia leaving the scene, the landscape of this shiny new gaming industry has changed quite a bit. The only major players in the space are Xbox Cloud Gaming and NVIDIA GeForce Now, with Amazon Luna lurking in the distance.
A good thing for Xbox Cloud Gaming?
It’s often frustrating that Microsoft doesn’t publicly offer direct numbers on how to use many of its services, but they did hint that its Xbox Game Pass Ultimate cloud service is doing quite well. Earlier this year, the company pledged to bring the games you own into the cloud service beyond the Netflix-like rotating library it currently offers. They also confirmed plans to create a Stadia-like streaming console that you can plug directly into your TV, called Xbox “Keystone.” Microsoft also announced plans to more than double Xbox Cloud Gaming server capacity to “meet demand.” If Xbox’s cloud platform wasn’t performing so well, I doubt they would make those kinds of investments.
And indeed, speaking of investments, the gigantic Activision-Blizzard deal is almost entirely about investing in content. Games like Diablo IV will be truly massive on Xbox Cloud Gaming, with latency benefiting from the isometric game design, delivering a true Diablo experience on mobile devices that are plagued by paid clones (like the own RPG-meets-casino Diablo Immortal).
Stadia VP Phil Harrison reportedly blamed Xbox’s acquisition of Bethesda for Google’s ambivalence toward in-house content creation, realizing that content acquisition will actually be, you know, cost money at one point. “Build it, and they will come” is not enough in gaming, and Google has learned that the hard way.
Still, Stadia had avid fans, and for its flaws, cloud gaming has great use cases for those times when you can’t use the TV, for whatever reason. Many of these users will now take all their Stadia refund money and perhaps consider an investment in Xbox Game Pass Ultimate instead, which should get a family plan in the short term, and mountains of Xbox exclusive games to come in the long term. . . But could Stadia’s death lead to regulatory complexities for Microsoft?
A bad thing for Xbox Cloud Gaming?
The President of the United States, Joe Biden, recently launched a series of tweets signaling his intention to stimulate competition in the American market. There’s no hint of specific companies being targeted, but the FTC recently intervened to block Facebook from acquiring a VR fitness company, in a move that some legal experts said was fairly rare.
There is a school of thought that this action revolves around the relative birth of the VR space. In the early days of social media, Facebook was allowed to take over WhatsApp, Instagram and other platforms, essentially becoming the sole arbiter of social content on the web. Facebook has been accused of spreading fake news and disinformation campaigns by hostile governments, leading to various legal challenges over the years. Amazon and Google have both come under fire for how they have exploited their dominance in retail and search to stifle competitors.
Microsoft has not been the subject of major regulatory investigations since the browser wars of the late 90s. However, is there a possibility that the death of Stadia could be considered by regulators as a decrease of competition in a space that Microsoft is essentially poised to dominate?
For decades we have seen less competition and more concentration in our economy. That’s why I signed an executive order committing the government to fully enforce our antitrust laws. More tolerance for abusive monopolies.September 26, 2022
Britain’s competition regulator recently signaled plans to take a closer look at the Activision-Blizzard deal for Microsoft, which is expected to be valued at around $70 billion. Sony’s PlayStation has denounced the deal, saying giving Microsoft sole control of mega franchises like Call of Duty would hurt its market position. Microsoft usually responds by noting how much smaller it is than PlayStation and Tencent, even after the Activision-Blizzard deal, while emphasizing its intention to keep Call of Duty on PlayStation. Yet Sony’s own cloud streaming service is just a mere footnote in a space increasingly dominated by Xbox and NVIDIA’s GeForce Now.
It’s still early days for the cloud streaming space, but one thing is clear: it was the lack of content that killed Google Stadia. Could his disappearance be weaponized by Sony, or even NVIDIA? Could they use Stadia as an example of how Microsoft’s content exclusivity can harm their own streaming services? I certainly think Stadia’s slow death could become a factor in future regulatory discussions.
The future is cloudy
The long-term viability of cloud streaming as an alternative to native mobile or console gaming remains uncertain. Whether it’s latency or usability issues, core costs, or competing handheld devices like the Nintendo Switch or Valve Steam Deck, it’s certainly interesting to watch the twists and turns of this very young industry.
Facebook’s aggressive pursuit of its metaverse white whale is already under the regulatory microscope, but Facebook arguably falls under the very vague reference to Joe Biden’s “abusive monopoly.” I would say Microsoft’s 2022 is far from anything that could be described as abusive. Either way, the death of Google Stadia could shed light on the role content control plays in the health and competitiveness of different platforms.
Microsoft has always said its goal is to bring games like Call of Duty to more platforms, not fewer, though. And we could see that commitment tested in a world where Xbox Cloud Gaming is the only major player left in this very niche, but incredibly promising space.
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