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Google pulls the plug on Stadia today: What went wrong?

18 Jan 2023 | Rasmus Larsen |

Today marks another dark day for game streaming. Why did Google Stadia not take off in its 3 years of existence? Was Google overambitious or not ambitious enough?

The first two high-profile game streaming services Gaikai and OnLive failed, and were both acquired by Sony in 2012 and 2015, respectively, for their cloud streaming assets. You may recall that Sony offered a PlayStation Now app that could stream PlayStation 3 games directly to TVs and Blu-ray players – no console required – before it was shut down on most devices in 2017.

Despite major acquisitions and investments in the field, Sony squandered its lead in cloud gaming.

Sony's troubles, however, did not deter Google. In late 2018, Google's 'Project Stream' entered closed beta and in November 2019 Google launched Stadia publicly as a standalone service for game streaming where users were asked to purchase games individually and sometimes get a few bonus games in their hat with a subscription plan that also gave acces to higher-quality video streams.

 Google Stadia game streaming

Phil Harrison, VP and GM of Google Stadia, speaking at the launch event in March 2019

Streaming is not the product

Google was very eager to get started and the launch was plagued by issues, limitations and broken promises, but many argue that it was ultimately Stadia's business model of individual game purchases that led to its demise. We believe this first factor to be only part of the failure. Remember, Sony's PlayStation Now became a subscription service with a good selection of popular PlayStation games, but to little effect. Yes, it was for a long time limited to PS3 titles (PS4 games were added in 2017), but Sony's CFO Hiroki Totoki in 2019 provided some perspective saying that just 7 months after PS Now added the ability to also download games, players spent twice as much time playing downloaded games compared to streamed games. OnLive, Gaikai, Sony and Google all treated game streaming as the product but in reality it should just have been a technical component of a larger service. This is how Microsoft has approached things with Xbox Game Pass and Sony too has pivoted with the merger of PS Plus and PS Now. Sony still offers game streaming but only in the most expensive PS Plus tier. In essence, it just doesn't make sense for users to stream a game over the internet to a device that is perfectly capable of running a local copy of the games, i.e. a PC or console, and has access to a much, much larger selection of games on Steam or the console store – just like how it makes little sense to stream a movie to a console or Blu-ray player with a disc drive.

 Google Stadia game streaming

Google promised the world at its glitzy launch event in March 2019

Priorities, priorities, download

This brings us to our third factor: Google should from the get-go have included a download option and should instead have used game streaming to expand the market potential for Stadia. Google had its priorities all wrong when it launched Stadia on PCs and insisted that users use game streaming. It was a defendable assumption for smartphones, except that PC games are not designed for small touch screens. The only right choice Google made in terms of its go-to-market strategy was to focus on Chromecast Ultra, but in the process it missed the real opportunity: The millions and millions of Smart TVs out there, where Stadia could have enabled AAA gaming on relatively slow hardware to let users save a significant portion of money by not having to buy a physical console. We had to wait until June 2021, almost two years, to get Stadia on Android TV – Google's own freaking TV platform! It took until December 2021 to bring it to LG TVs and until June 2022 to bring it to Samsung TVs. And it only worked on LG and Samsung's latest generations of TVs!

The dark horse: Apple

The fourth factor, which there is surprisingly almost no mention of in relation to Stadia's failure, is Apple. This one is two-fold. Apple did not allow game streaming services onto its app store, and even after revising app store rules Apple seemingly did not really want them, so Stadia never arrived as a functional app (there is an app but it does not let you stream the games) in Apple's store. Instead, Stadia had to be used from a web browser, which is not ideal. Google did not fight Apple – at least not publicly – but Microsoft took up the fight and it is clear that Apple's roadblock has major implications for Microsoft's roll-out plans for Xbox Game Pass. The Apple ecosystem is vital if Microsoft – or Google – wants to reach millions or perhaps even hundreds of millions of paying users. And then there is Apple Arcade, which launched around the same time as Google Stadia in late 2019. Arcade is a subscription service with downloadable games. Arcade and Stadia were not direct competitors and there are few similarities, but Arcade may still be the best example of why Google Stadia failed. In fact, we would argue that Apple Arcade competed asymmetrically against Stadia, and continues to compete asymmetrically against PlayStation and Xbox. It just requires a very long perspective to see how. With Stadia, Google started from the top by wanting some of the most advanced PC games tied to game streaming technology. A niche within a niche. With Arcade, Apple started from the bottom with the idea that it can use mobile gaming's foundation (billion-user scale, ARM CPUs etc.) to gradually expand its position in the gaming market to higher-end segments such as the PC screen (via Macs) and the TV screen (via Apple TV). It is a concept known as "disruption" and it takes many years plus a lot of patience and iteration. The only real statistic we have on Google Stadia's user base is Destiny Raid Report's stats on Destiny 2 players (link). They reveal that Destiny 2 accounts created on Stadia amounted to less than 900,000 (1,5% of all Destiny 2 accounts). Destiny 2 was one of the first games to launch on Stadia and one of the most "popular". The whisper number on Apple Arcade is "nine-figure subscribers" (via iMore), a number seemingly divulged to the developer of Football Manager. It is a little hard to believe that Apple Arcade has 100+ million subscriptions but it is worth remembering that millions of Apple subscribers have access to Arcade included with their Apple One subscription. Whether they use it actively is, of course, another matter. But let's say Apple at one point adds a killer game to Arcade to lure these people out of passivity – and then build from there. This is what Google should have done with Stadia. Give everyone in the Android ecosystem and other ecosystems access to mainstream games they could actually play. Start from the bottom, build up, expand the market, win. Instead, Google Stadia will be buried at the Google graveyard today January 18, 2023.

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