While Google has made quick progress in launching its cloud gaming platform, the main criticism is a lack of independent content creators. The launch of its Makers initiative hopes to correct this.
Announced during the virtual Google for Games Developer Summit, Stadia Makers will attempt to lure independent game publishers into the Google universe, adding depth and variety to the currently thin content library. If Google Stadia is to be a sustained success, this initiative will have to get off to a flying start.
“For this expansion of self-publishing, Stadia Makers is partnering with Unity, a team with a long history of building new platforms and gaming services hand-in-hand with the developer community,” the team said in a blog entry.
“Unity has worked with thousands of game developers over the years, and today, powers 50% of all new games with optimized support for Stadia and more than 25 other platforms.”
Since launching the platform in November 2019, 30 games have made their debut, while there are another 120 slated for release over 2020. As it stands, this is a thin library, and while it will certainly appeal to millions of gamers, if the platform is to meet the expectations of Google it will have to increase.
Cloud gaming has the potential to upset the status quo in the gaming industry, as the promise of decreased installation times and removing the need for on-console storage is attractive. By storing content on the cloud, instead of on consoles in the home, greater flexibility and agility is introduced to developers when it comes to updates and development, while new experiences can be introduced as some of the technical limitations of the consoles are released.
This has been the challenge for the gaming industry in the past. It is way too expensive to constantly upgrade the consoles and PCs to ensure the desired game performance. Streaming from powerful servers without the need to download or update is a significant advantage.
However, as Google is leading the world into the unknown, there are no prior experiences or precedents to benefit from; it will have to learn from parallel industries. The increasingly popular streaming segment, and Netflix in particular, could be used as an excellent example to learn from.
Similar to cloud gaming, subscription video-on-demand (SVOD) revolutionised the content world by creating a new dynamic in terms of the distribution of content. It digitised the accessibility of content, turning consumer habits upside-down in the process. And in the SVOD world, Netflix is the reigning champion. There are pretenders to the throne, but Netflix is realistically the only one who could claim the number one spot. But Why?
Firstly, it was first to market. Secondly, the pricing point was excellent. Third, the user experience can be matched by few others. And finally, the depth, breadth and quality of the content is arguably unmatched. In the platform world, content is king.
But what is critically important here is the democratisation of content creation. Netflix lowered the barriers of entry to offer more independent content creators a gateway to the consumer.
Whether it is blockbuster movies, edgy series, nostalgia driven shows, niche documentaries, ‘live’ comedy, hyper-localised entertainment or cult-content, the breadth and depth of the library appeals to everyone and anyone. The discovery function still needs work, which can frustrate consumers, but there is content for any fad, craving or guilty pleasure. Netflix has invested in content, encouraged variety and then doubled down year-on-year.
This approach works. It is expensive and somewhat of a slow burner in terms of profitability, but the Netflix financials are showing that patience pays off. Looking at the latest financial statement, Netflix revenues exceeded $20.1 billion, with net income of $1.8 billion, with 167 million subscribers. These are huge numbers, but there is still significant potential for growth outside the US where Netflix has 106 million customers.
First and foremost, Google can learn three things from Netflix; a sound pricing strategy, an excellent user experience and an extensive content library. These are the three areas Google should be heavily investing in immediately, but then it should also be taking note of the partnership programmes which the streaming companies are benefitting from.
Looking at the Disney+ go-to-market strategy in Europe, the team is heavily reliant on partnerships with connectivity companies to gain access to customers but also lean on the credibility these companies have developed in terms of billing. Google has already partnered with Verizon to gain access to new customers, and it should be looking for more partnerships with telcos around the world. Fortunately for Google, the telcos are very open to discussing relationships with the rowdy Silicon Valley residents.
With convergence, or bundling, strategies becoming much more prominent, the telcos are searching for new partners to add additional layers of value. Data is effectively a commodity nowadays, therefore, to improve loyalty and maintain ARPU, new services have to be built on top of the connectivity foundation in contracts. Content is the most popular today, though gaming could certainly factor into the equation.
It might not sound like the simplest of routes to success, but the prize at the end of the rainbow could certainly be worth it.
According to Global Web Index, currently 16% of gamers use cloud gaming services, though these are most likely to be among the top 25% of earners in their demographic. Markets and Markets, another analyst firm, suggests the worldwide cloud gaming segment could be valued at $306 million in 2019, but this will rapidly increase to $3.1 billion by 2024 thanks to the commercialization of 5G, the rise in a number of gamers, and the upsurge of immersive and competitive gaming on mobile.
The major financial rewards might be a few years down the line, but the COVID-19 pandemic which is forcing so many consumers indoors presents an opportunity. Without pubs, schools or parks to fill the hours, many potential customers will be searching for entertainment. The streaming companies are clearly benefiting today, though an effective engagement campaign could reap benefits for Google and its Stadia platform.
The cloud gaming segment could offer significant rewards for Google, though it will have to learn from Netflix if it would like to realise the full potential. Breadth and depth of content is critical, and to do that the independent content creators, not just the multinational game publishers, will have to be brought on board; scale is everything.