Google Stadia was announced in March 2019 at the Game Developers Conference to much fanfare. Over the next year, a series of big moves and announcements showed their commitment to this venture. To attract more users to the platform, they were going all-in on AAA game development, by starting their own internal game studios. They added to their list of industry veterans – with Phil Harrison (previously at Sony and Microsoft) at the helm – they recruited Jade Raymond (previously at Ubisoft and EA) to lead their internal development studios. They opened their first studios in Los Angeles and in Montreal and acquired Typhoon studios, which were just about to launch their debut game.
However, these big investments would take longer to have an impact on their performance – which while there are no public figures on, it’s apparent they were already missing the mark considerably. Initial reviews were mixed – it seemingly offering casual gamers a value entry point, but with inconsistent but improving performance, and a limited game selection. Earlier this year, they announced that Google would be closing their game development studios. And there have been other negative developments that now have the industry wondering, is Google Stadia a sinking ship?
I see a few take-aways from this, and it makes me wonder – is this proclamation going to hold true? Or is this just a pivot that could save the platform, a move at that scale more resembling a big ship that is slowly turning?
The Challenges of Building a AAA Game Studio
AAA games are expensive to make, upwards of $50 million in development costs for many popular titles, with some going way beyond e.g. Grand Theft Auto V cost $137 million on development alone!
Ignoring the cost for a moment, you also have to factor in the time and investment it takes to start a development studio, get the cross-functional resources in place (development, creative, QA among many others), and spin up a development pipeline that can successfully launch a title. Additionally, the creative process involved to develop story, artwork, dialogue and anything under that umbrella adds significant complexity to the development process.
It can take some studios 2 – 3 years to launch a AAA title. You can see this when you look at the history of some popular studios. Naughty Dog took anywhere from 1-3 years between their games launched in the last 10 years, and they only published the Uncharted and Last of Us series. Some studios can be more prolific when they land on a good formula that they can replicate within their development pipeline. Ubisoft had been pumping out Assassin Creed installments almost every year at their peak, and the same for Activision and their Call of Duty series.
But all of those studios had already been developing games before these prominent titles. To start a studio from scratch and get to that launch cadence could take a long time (years I would bet), which I doubt Google would have the stomach for. They did acquire Typhoon studios, but they only had one game ready for launch at the time, which is a risky play. In contrast, from the first Xbox launch, Microsoft has been on a buying spree to build up their game portfolio.
Google thought that they could start their own game studios using the same approach to staffing product teams, but didn’t realize how challenging it is to start a development pipeline that gets complicated by the addition of the “creative process”, which they don’t have as much experience in. They soon came to this realization, among the challenges getting their studios staffed up and running mid – pandemic, and seeing sub-par subscription numbers they couldn’t stomach further investment down this path. And hence, they decided to pull the plug on first-party game development and focus on developing partnerships with external studios.
It’s still not clear exactly why Google decided to abandon the first-party studios it started building up less than two years earlier. In his blog post, Harrison referenced the rising costs of game development as a factor.
“Creating best-in-class games from the ground up takes many years and significant investment, and the cost is going up exponentially,” he wrote.https://kotaku.com/stadia-leadership-praised-development-studios-for-great-1846281384
In his Thursday Q&A with staff, he pointed specifically to Microsoft’s buying spree and planned acquisition of Bethesda Software later this year as one of the factors that had made Google decide to close the book on original game development.
Building The Platform Flywheel
With Google’s investments in cloud infrastructure, they were cognizant of the possibilities that were available with rapidly improving connection speeds/latencies, off-premise compute, and storage capabilities. They tested some proof of concepts in 2016 and opened to beta in 2018. I should highlight that they were not the only ones to realize this, the other big players with significant cloud infrastructure also were beginning to see this. Amazon launched their streaming service, Luna in September 2020, and Microsoft launched their xCloud service around the same time.
To succeed as a game streaming platform, they would need to create a strong flywheel that could create strong feedback loops and accelerate their growth. A flywheel for a game streaming platform could look something like this:
With these streaming platforms, they are trying to reduce the dependency on hardware from the equation, allowing users to play on any device e.g. Android, iOS, PC, Mac. The opportunity here is huge because it opens up a massive distribution channel that wasn’t available before (international launches are easier!) and offers another subscription-based monetization play (similar to Netflix).
While these players have the tech and platform capabilities to compete, they needed one piece to start building their flywheel, which is their game selection. Microsoft had a head start here with their Xbox portfolio. There are two ways you could build out your game selection – partnering with external studios to launch games on your platform, and developing exclusive games for your platform through internal studios. It seems Google and Amazon tried both approaches, and it seems Google wasn’t the only one facing setbacks with their internal studios.
This goes back to the previous challenge of developing AAA games, and how long that can take to get right. I think it will take time to figure that out, and with their internal timelines and stiff competition, they might not have that luxury. One might feel that it is more prudent to focus on opening up and making the platform more enticing for external developers. And that is what Google is pivoting towards now, as Phil announced earlier this year.
We’re committed to the future of cloud gaming, and will continue to do our part to drive this industry forward. Our goal remains focused on creating the best possible platform for gamers and technology for our partners, bringing these experiences to life for people everywhere
https://blog.google/products/stadia/focusing-on-stadias-future-as-a-platform-and-winding-down-sge/
Given their successes with the Android platform, I could give them the benefit of the doubt, but building an OS platform on top of the hardware stack is a layer below this. They are operating on various OS platforms, focusing on the delivery of the gaming experience, which has its own host of challenges/constraints. The platform shows some promise with some of their recent launches though, for example, Cyberpunk 2020 performed much better on Stadia initially, compared to all the issues the game had on the latest generation consoles.
What’s Next – The Google Graveyard or a Phoenix Out of The Ashes?
It is apparent that they are in dangerous territory now. Google got very excited with the Stadia platform at the outset, but faced a bit of a reality check the further they got into AAA game development and had to re-align their priorities to focus on where their strengths are. They could succeed if they double down on building a strong platform for external studios. But it’s unclear how much patience their leadership will have to see if this can still succeed.
I will be very intrigued to see what happens.
Ajith Thilakan 