The company took to its Keyword blog to announce that it will no longer be investing in exclusive content for Stadia via its SG&E studio, opting instead to focus on helping game developers and publishers deliver third party Stadia games on the platform.
While Google insists that this is not the end for Stadia and that the company remains committed to driving the cloud gaming industry forward, early Stadia adopters will no doubt be disappointed in the platform’s scaling back of original titles.
We reached out to Lead Games Analyst at Futuresource Consulting, Morris Garrard, to learn what this move could mean for the future of Google Stadia.
Here’s what he said.
“Since its launch in November 2019, Google Stadia has amassed close to 2m users, though the service experienced a rocky start at launch with infrastructure issues and a limited content library tempering consumer uptake of the widely hyped cloud service”, said Garrard.
“Google has been able to build some momentum for the service over 2020 however, with a combination of the ever-rising consumer interest in gaming hitting all time peaks during the Covid-19 pandemic and bundling deals with other Google service subscriptions, foremost among which was YouTube Premium. Part of the initial struggle was content acquisition, which made sense for Google to invest in in-house development, however with titles such as Orcs Must Die and Outcasters gaining limited traction, Google appears dissatisfied with the timeframe for its return on investment”.
According to Garrard, Google may be choosing to limit its investments until cloud gaming becomes more popular with players – a trend that is expected to rise by 2024.
“Whilst the shutdown of Stadia Games & Entertainment does not spell the immediate end of viability for the platform, it is perhaps an indication that Google is waiting for signals that cloud gaming is gaining consumer traction before investing heavily in the proposition. At present, the market is in a state of infancy, currently accounting for less than 1% of the total $154bn spent on gaming software in 2020, with a number of external factors such as 5G rollout limiting the total addressable market for game streaming.
“It is expected however that by 2024, cloud gaming will be a viable alternative to dedicated gaming hardware (expected to generate around 6% of gaming software revenue, which itself is forecast to reach $200bn by 2024), at which point if Google is still invested in gaming the company may regret its short-sightedness at ceasing in-house development of content”.
However, Stadia wouldn’t be the only tech-forward project Google has abandoned in recent years after it failed to make the company enough money.
“Google has been known to drop projects it deems unprofitable in the past, for example Google Glass, Daydream VR and most recently Project Loon, so it may cause great concern to Stadia enthusiasts to see Google already retreating from the gaming coalface”, warned Garrard.
“Whilst cloud gaming competitors such as Microsoft, Amazon and Tencent may be prepared to play the long game, seeding consumer interest in the short term before capitalising a few years down the line when the market has the capacity to support a more widespread transition from dedicated hardware to platform agnostic cloud gaming, it appears Google is already showing the signs of impatience that has led to the downfall of previous projects. Stadia has performed an important function in the rise of cloud gaming within the industry’s collective consciousness, however we may already be seeing the beginning of the end for the first mover”.