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Summary

On June 6, Google revealed details about the pricing, availability, and content for its upcoming cloud gaming service, Stadia. The new details about the service, which the search giant announced in March (see "Google puts cloud gaming center stage at GDC," CES003-000465), did little to address the pricing and business model challenges that Google and other cloud gaming providers face.

Google Stadia's pricing is the major pain point

During its first Connect online conference, Google revealed that it will offer two types of Stadia accounts: the paid Stadia Pro and free Stadia Base. The Stadia Pro service offers up to 4K resolution, 60 frames per second, and HDR streaming. It will be priced at $9.99 when it launches this November in 14 countries. Pro subscribers will receive access to some older games, but crucially, they will still have to buy the latest games, albeit at an unspecified discount. The free Stadia Base accounts (slated to become available in 2020) will be capped at 1080p resolution, with no access to free games or discounts. However, if the price points are compelling, Google could succeed in drawing in more casual users who don't wish to invest in gaming hardware.

Many consumers and industry commentators expected Stadia to be a Netflix-like service, offering unlimited access to a library of games (including new releases) at a flat monthly fee. It's now clear that the business model will be one of the biggest pain points for cloud gaming. It's likely Google wanted to adopt a pay-for-access model, but unsurprisingly, this didn't appeal to top-tier game publishers, who are happy with lucrative single-copy sales. Stadia desperately needed these partnerships, so it found a compromise. Google must therefore look at more creative business models, particularly as it appears to be targeting hardcore gamers, many of whom already have consoles or gaming PCs and are happy with the status quo. Given Google's commanding position in digital advertising, one compelling approach would be to use dynamic in-game advertising and push free-to-play games on Stadia.

With other cloud gaming services on the horizon – most notably EA Project Atlas, Microsoft xCloud, and Tencent Instant Play – it remains to be seen what types of pricing and business models will emerge and, importantly, which will garner the largest consumer appeal. Further news is expected to emerge at the E3 event, running June 11–14 – which Ovum will be watching closely.

Appendix

Further reading

"Google puts cloud gaming center stage at GDC," CES003-000465 (March 2019)

Author

George Jijiashvili, Senior Analyst, AR/VR and Video Gaming

george.jijiashvili@ovum.com

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