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Home / US Business / Google Stages aims at $ 130 billion video game market

Google Stages aims at $ 130 billion video game market

This year's most awaited release in the computer game world is not a new console, or even a new title. Instead, it's a new way of playing games, from a new entrant to the world's most lucrative entertainment market.

Google on Tuesday launches Stadia, a service that will stream the first 10 computer games in 14 countries at launch.

It promises players a high-speed console-quality experience, from living rooms to smartphones, from one of the search giant's many huge data centers.

Unlike the launch of a console, Google's platform offers enormous scale. While Nintendo's Switch sold huge 1

.5 million units in its opening weekend in 2017, Google suggests it will have a potential customer base of hundreds of millions from day one across North America and Western Europe. "We're very confident that we can reach the widest audience," said Phil Harrison, Stadia's chief executive.

It's an exciting prospect for developers like Ubisoft, whose titles Assassin's Creed Odyssey and Just Dance 2020 are among Stadia's launch catalog.

"When you" turn on "streaming, it's not a slow adoption period," said Chris Early, senior vice president for partnership and revenue at Ubisoft. "It's exciting for us to think of tens of millions of people who have access when you turn the switch."

Google will narrowly turn its main rival in the field of cloud gaming, Microsoft, into a public launch. Many in the gaming industry had expected Amazon to enter the market as well, building on the strength of its AWS cloud computing service and Twitch, which allows players to share live video of their games. But there has so far been little indication that an Amazon gaming service is imminent.

Analysts said that Google and Microsoft are in for a long, expensive battle to win both consumers and developers.

The two companies have the unique ability to deliver their games due to their huge cloud computing businesses, but it is unclear whether consumers want this product more than they did a decade ago when predecessors OnLive and Gaikai first launched.

People who play the game & # 39; Doom & # 39; at the Google Stadia booth at a Germany gaming event in August © Ina Fassbender / AFP / Getty

Unlike the start-ups, both of which were eventually acquired by Sony, Google and Microsoft have "almost endless money," said Bruce Grove, OnLive's former technology manager who now runs PolyStream, a new cloud gaming start-up . "If you have that much money, you can at least mask the business model problems – and it can be quite a long time," Grove said.

Silicon Valley executives acknowledge that they must play the long game. "Google is making a very long-term investment here," Harrison said.

"One of the benefits of working in Microsoft is that it allows us to take a longer perspective on how technologies are evolving," said Phil Spencer, head of Microsoft's gaming business. We make decisions that can have a negative impact on the economy in the short term. But we have a long-term view of where this business is going. "

  Column chart of global consumer spending on gaming content and services ($ billion) showing cloud-based gaming can revive slowing growth in gaming

Piers Harding-Rolls, game analyst at IHS Screen Digest, said Google is a" massive drawback " for Microsoft and Sony, which has their own game streaming service, PlayStation Now.

"They don't have the content, and they don't have an existing [console] business to depend on," he said. "The console companies are very well positioned during this transition period because they can cater to all audiences."

Although Google has promised that at least a dozen more games will come before the end of the year, Microsoft announced Last week, the rival xCloud project will boast more than 50 titles when it launches on Android phones and Windows 10 PCs next year.

Each Azure data center that supports xCloud is equipped with hardware similar to Microsoft's Xbox One console. This means that all the thousands of games released on the Xbox can easily be accessed through xCloud.

"The fact that our cloud platform is [based on] Xbox means [games creators] doesn't have to evolve for something new," Spencer said. “When thinking about how this game room is going to evolve, we centered on three things that we thought were critically important: game content, a community of players, and global cloud infrastructure. The next generation of gaming competitors must be world-class on all three of these things. ”

While Google operates one of the world's largest gaming markets with its Android app store, its players and developers are often different from the console world.

Google is trying to position it as an advantage, offering new types of experiences – such as clicking on a YouTube video stream to join the game – that go above and beyond to mimic a traditional console experience. For example, a group of four friends playing Ubisoft's Ghost Recon Breakpoint will be able to watch a live video stream from each other's point of view. "There's something we can't do on a console today," Mr. Early said.

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But Stadia requires a fast broadband connection, with speeds of as much as 35 Mbps needed to play high-resolution 4K full-resolution games. Early said that players' internet bills are a potential concern, especially for those with download limits.

There is only one anxiety among many that game publishers have about services like Stadia and xCloud. A recent survey by EY of more than 200 video game industry executives found that while more than two-thirds agreed cloud-based gaming would be the "dominant form" to play in five years, many also said they expected development and infrastructure costs to go up as a result.

In addition, there is uncertainty surrounding the game streaming business model. Microsoft has not yet set prices for xCloud, but has suggested that it is open to experimenting with a variety of models, from one-time purchases to subscriptions and even advertising-funded services.

It makes it difficult for game creators to figure out how they will come back from streaming, said Nicholas Lovell, game director at developer Electric Square, especially before Stadia or xCloud has been extensively tested.

"You need these third-party publishers to invest in the new platform, and I don't know anyone is prepared to do that yet," he said. Last year, video games and services accounted for $ 130 billion, according to IHS Markit.

Mr. Spencer claimed that xCloud in time will help developers make money in markets like India where consoles have never taken off.

"Revenue per user may be different in these [new] markets, but they are markets where [publishers] does not make any money today, so there is a subsidy to the business they already have," he said.

Simply selling to existing console players will not be enough to sustain growth, at a time when random gaming on smartphones has been the main way the industry has expanded its audience.

"Today, there are 200m-250m console players on the planet that are shared between us and Sony and Nintendo, and are not really growing," Spencer said. "Obviously, you're not going to make all 2.5 billion people playing games today to console owners… You have to look at the devices that people already have."

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