Google Unveils Its "Netflix of Gaming" [GOOG]

Google's cloud gaming push has the potential to disrupt a massive $130 billion market, but will need to overcome some key hurdles first.

On Tuesday, Google unveiled Stadia, a new cloud-based gaming service that would allow anyone to game on any device using just a Chrome browser - no consoles or specialized hardware needed.
As a rapidly growing market that now nearly rivals the film industry in size in the U.S., gaming is a very attractive market - and some people are already dubbing Stadia the "Netflix of gaming."
However, we believe there are 3 major hurdles that Stadia would need to overcome in order to attain the runaway success that Netflix has seen:
Competition. We believe Stadia will soon be competing with Amazon, who is rumored to be developing a similar cloud gaming product built on top of its market-leading game streaming platform, Twitch. Coupled with its industry-leading cloud assets, we believe Amazon poses a significant threat here, even as a second entrant pitted against Google.
Internet speeds. It's unclear whether current internet speeds are fast enough to support the bandwidth a cloud gaming service would likely require. We believe that only 20% of American households have access to the download speeds Stadia would require, and noticed that even during the live product demo on Tuesday, Stadia seemed to suffer from some buffering problems.
Consumer behavior. Perhaps most importantly, we believe there may need to be a meaningful shift in consumer behavior if Stadia is truly to take off. Each year, the majority of the gaming world's attention tends to be concentrated on just a handful of flagship games. This in theory would reduce the necessity and value of the streaming/aggregation approach that Stadia appears to be taking.
It remains to be seen whether this consumption dynamic merely represents a "content discovery" problem waiting to be solved by Stadia (much like what Netflix did for film/TV) - or is rather evidence that the film/television analogy may not be as relevant for gaming as it may seem.
Stadia is set to launch at some point in 2019 - we'll be keeping a close eye on the rollout for further updates.
Mar. 20th, 2019
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