Google has announced a potential game changer for the worldwide gaming market by announcing Stadia, a digital gaming platform that will stream ‘better than console’ quality games to TVs, laptops and PCs through an Internet browser. This will be supported by a new controller and is planned for release later this year. No pricing has been announced, but if it follows what other streaming services do, we should expect a monthly subscription fee, with perhaps an additional unit price for some games.
The success of Spotify and Netflix shows that consumers are happy to pay for streaming and it will be interesting to see how well the adaptive streaming technology Stadia develops as internet quality, alongside content choice, will determine the success of the platform.
This could see gaming join pretty much the rest of the media as becoming a streaming first service and this raises obvious questions on how this will impact the distribution and monetisation business models in the gaming sector, with its interdependent network of developers, studios, publishers and hardware platforms.
Gaming is by far the most valuable entertainment medium by revenue (not surprising as the unit cost for big hitting games is £45) and has managed to embrace disruption in the past. The process of buying a physical thing from a retailer and putting it into a physical machine is still the main sales channel and playing style for consoles, but in recent years we have seen online stores and mobile take a significant market share, with mobile gaming sales earning $22bn more than console gaming.
Online platforms have also provided a market and platform for new developers to publish their games directly, which has seen the choice of games expand by literally tens of thousands, with many of these being critically acclaimed and award winning. Platforms like Steam have also become more mainstream and PlayStation launched a cloud streaming service called PS Now too which shows there is appetite among established companies for doing things in a new way.
In terms of monetisation 27% of all gaming revenue comes from people buying a console game for a one-off price, but this is predicted to shrink over time to around 20%. A strong minority of people regularly pay for DLC (downloadable content) that expands a game and games like Rocket League and Fortnite (plus most major mobile games) successfully use a free-to-play business model with the option to purchase upgrades and cosmetic items.
At techUK we don’t take a view as to whether physical is better than streamed – consumers can determine that for themselves, but we should celebrate that rising broadband speeds, excellent cloud reliability and falling prices for faster Internet allows consumers to make this choice.