In the last decades several companies moved from physical products towards streaming and digitized products. Spotify and Netflix are a clear example of how offering a streaming product can better address the needs of customers by giving the unique possibility to easily access to a wide variety of film, music etc.. from wherever in the world, in every single moment of our everyday life without any physical product and its implications (for instance in the case of a DVD going to the shop, playing the film at home, dispose the DVD etc..).
The basis of streaming success is not only the simplified usage but also the so called network effect. According to Shapiro ( 1999), the network effect is a phenomenon whereby increased numbers of users improve the value of a good or service. The more people use a social network the more interactions, shared ideas, discussions etc.. and all these both attract new users and retain the old ones.
Now, think about the gaming industry. Approximately fifteen years ago, PlayStation in the 2006 and Xbox in the 2002, Sony and Microsoft launched their online multiplayer gaming services, creating a total new approach to videogames based on the aforementioned network effect. Gamers could join community, create teams, challenge each other etc. The success of every videogame is due to the possibility of constantly challenge yourself and other gamers. People feel satisfied when they improve their skills and they become the “best one”. That pursuit of perfection, has led some gamers, unfortunately, to constantly play trying to climb in the rankings.
So, consider what it has been just said. Streaming could further enhance this “videogames community”. People will no longer need expensive games and console, they will be able to easily access the games from everywhere using their phone, tablet, PC or TV. Nevertheless, Microsoft and Sony, the main actors in the videogame market, have moved slowly towards what could be a streaming game platform.
But now, things are changing. The last year, Google announced the launch of its streaming game platform called Stadia. The Google Stadia Base will be available for free, whereas the Pro version will cost 10$ per month and the only device. All the games will run not on a console but on the Google’s cloud servers. Furthermore video games will be accessible by simply using either the Chrome browser or a Chromecast ultra ( the latter one for TV). So everyone from everywhere in the world will be able to play videogame from either a mobile phone, computer, TV without both any external device and any physical game. That will not only enhance the spectrum of potential players but also, with further technology advances, will surely disrupt the gaming market.
As a consequence, both Sony and Microsoft have reacted to what could disrupt them in the near future. Surprisingly, the “antagonists” have decided to team up for the future of gaming. They will have to challenge one of the big four, Google, whose expertise in the cloud/online services is probably one of the greatest all over the world. As reported in the Warren ( 2019) article: “Sony is now looking to Microsoft’s vast cloud experience to help power its existing and future streaming services, and Microsoft is teaming with a rival to fend off far larger gaming threats”, so the unity is strength.
But that’s not all, there are rumors that Amazon is considering to enter in the newest cloud gaming market. Considering the expertise of Amazon about the cloud and new technologies, which has even increased with its Amazon Web Service, the interest of Amazon in such market is not surprising. So, how do you think the gaming market will change in the future? Is the cloud the future of gaming? There will be other technologies that will disrupt/ change the market? Will Amazon and Google beat Microsoft and Sony?
Sources
https://www.playstation.com/en-gb/explore/ps4/playstation-through-the-years/
https://aws.amazon.com/
Xbox Live Arrives in Stores, Sparking the Next Revolution in Video Games
https://www.digitaltrends.com/gaming/what-is-google-stadia/
https://www.techradar.com/news/stadia-everything-you-need-to-know-about-googles-game-streaming-service
https://www.inverse.com/article/56895-amazon-cloud-gaming-stadia-xcloud
https://www.theverge.com/2019/5/20/18632374/microsoft-sony-cloud-gaming-partnership-amazon-google
https://www.theverge.com/2019/3/20/18273977/google-stadia-cloud-game-streaming-service-report
Shapiro, C. (1999). Information Rules: A Strategic Guide to the Network Economy. Harvard Business School Press, 1–9. Retrieved from https://pdfs.semanticscholar.org/d2e5/e1e68223153cdf15d548cbb54d8359c10351.pdf?_ga=2.160738937.51458363.1568105476-1291834607.1560349272
https://www.techradar.com/news/google-stadia-vs-nvidia-geforce-now-which-is-the-best-cloud-gaming-service
Great article! Gaming will definitely be affected by streaming technology in the future.
Sony however has a streaming service productive for quite some time now (Playstation Now). Having used it, it’s okay and let’s you play PS3 games on PS4. You will need however a really stable and good internet connection, the slightest amount drop in speed and ping will really ruin the experience.
While Playstation Now follows a more Netflix-esque business model in which you don’t have to buy games anymore, with Google Stadia you will still have to buy games. There will be special offerings as well as a bunch of free games each month for Pro Subscribers but I think there is an important distinction to make.
Google will also offer a tier in which you buy a game in their store and streaming it in FullHD will be free on Stadia.
For the 10$ per month you will get access to better hardware. The important distinction to make is that the game is bound to Google’s platform, which might be a huge disadvantage. NVIDIA’s Geforce Now (currently in closed Beta) follows another approach, in which there is no game store attached to the service. You would pay for the infrastructure only, and login and buy the game on Steam, Epic Game Store, EA Origin etc.
There are many approaches to make streaming games attractive, and hopefully the customer benefits the most in the end and I guess we’ll see which other options different companies will offer!
With the huge increase in latency compared to traditional gaming, I would be surprised to see this succeed in short term. Long term, it could definitely have some success. Especially for the more casual gamers.
In competitive (online multiplayer) games, where reaction times are extremely important, cloud gaming could never take off.
Nice article! I think Amazon and Google will beat Sony and Microsoft at the long term if Sony and Microsoft not adapt. In my opinion Sony and Microsoft (respectively PlayStation 4 and XBOX one) are the main game consoles as long I can remember. Hence why I think that Sony and Microsoft can survive the attack from Amazon and Google. If Sony and Microsoft integrate cloud computing in their next console, I think they will keep up with Amazon and Google. Mainly because Sony and Microsoft do have such a rich history and customer base with regards to e sports and casual gamers. This base is a big advantage because the switching costs are high. The base of gamers is used to the controllers from PlayStation or XBOX, so I think Google or Amazon need to integrate some specific characteristics from PlayStation or XBOX to decrease the switching costs.
We will see what Sony and Microsoft will do to defend their position in the game world. But one thing will definitely change; cloud computing will be a huge part of the gaming industry.
Source:
https://www.weforum.org/agenda/2018/07/the-explosive-growth-of-esports/