A worker stands by a Google Inc. 'Google Cloud' pop-up space in Davos, Switzerland| Jason Alden/Bloomberg
A worker stands by a Google Inc. 'Google Cloud' pop-up space in Davos, Switzerland| Jason Alden/Bloomberg
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San Francisco: This week, more than 25,000 members of the video game industry are scheduled to descend on San Francisco for the geeky, and often sleepy, annual gathering known as the Game Developers Conference.

This year, though, more people than usual are paying attention. Google is set to unveil a video game service, codenamed Project Stream, that will reportedly allow people to play Fortnite and other modern titles in a web browser or on a television using inexpensive hardware. If it’s successful, the system might herald the biggest shift in the $180 billion a year global gaming market since Super Mario jumped from arcades to the living room.

Google has been privately testing Project Stream since last fall and just touted its announcement planned for Tuesday with a video trailer. The service will deliver games on demand, rather than as downloads, and is expected to support even the most fast-twitch and graphic-rich games, without the need for a PlayStation, Xbox or other high-end game console. It’s unclear whether it will work with existing Google devices like Chromecast or Google Home, or whether it will require players to buy new hardware.

Nevertheless, the project is already being heralded as a portent of the industry’s future, where games are streamed over the internet and a new phalanx of heavyweights could dominate—not just Google but Amazon.com Inc., Apple Inc. and maybe even telecoms. The major cloud providers control massive data centers, lightning-fast content delivery networks and other assets that allow them to reduce the lag associated with playing games over the internet. “Cloud gaming creates this moment in the industry where the multi-billion-dollar companies like Google and Amazon have a chance to buy their way in, in the same way they’ve done in video and music,” says Joost van Dreunen, a managing director at market research firm Nielsen.

Google isn’t the only company that sees an opportunity in creating a sort of Netflix for video games. Nvidia Corp., a chipmaker not known for its consumer products, was one of the first to sell a streaming-games console based on Google’s Android. Amazon, meanwhile, has been busy hiring gaming veterans like the man responsible for the Command & Conquer franchise.

The game industry’s current juggernauts are looking to fortify their positions from a possible shift to streaming. Sony Corp. has offered a subscription service for years called PlayStation Now. Electronic Arts Inc. acquired a streaming business last year and is building a platform called Project Atlas. Last week, Microsoft Corp. showed off a demo of something called Project xCloud, which will allow gamers to play cutting-edge games like online racer Forza Horizon 4 from just about any device with a screen and an internet connection.

Analysts suggest companies with technical expertise in cloud infrastructure will be better-equipped to compete. One lingering question is around business models. Will Google and its new rivals sell games individually or offer access to a large library via subscription, a la Netflix?

We’ll find out for sure on Tuesday, but Wedbush Securities analyst Michael Pachter believes the major game publishers aren’t quite ready to sacrifice profit margins to try something new. Like movie studios, game makers will likely view subscription revenue as cannibalistic to their main business of selling games, he says. Publishers typically offer up older games or lower-profile releases through the current crop of streaming products. As the tepid response to those services show, gamers want access to the newest, hottest titles. “Everyone wants to be the Netflix of games, but I’m utterly confident it won’t work,” Pachter says.

However, he hastens to add that new cloud gaming services could expand the market, rather than steal share from existing options. “There are a couple billion people out there with internet access and only 250 million consoles,” Pachter says. “This could at least double the industry.”- Bloomberg


Also read: Google enters India’s booming online music market with its YouTube music app


 

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