Google Can Still Fix Stadia

Stadia’s rocky launch left it vulnerable to competition, but Google can turn it around by leveraging its strengths as a tech behemoth

Google vice president and general manager Phil Harrison speaks during the GDC Game Developers Conference on March 19, 2019 in San Francisco, California. Photo: Justin Sullivan/Getty Images

The year 2019 was a big one for the video game industry. With Microsoft, Sony, and Nintendo all announcing plans for new consoles or console upgrades in 2020, no one expected it would be Google that would steal the spotlight with the launch of its subscription cloud gaming platform Stadia in late 2019. Google promised a video game streaming experience that featured incredible graphics: 4K resolutions, 60 frames per second, and low input lag on myriad games in the Stadia library. Gamers wouldn’t even need to buy a console — all they needed to do was find a game, click, and play.

It was the perfect opportunity for Google; the video game industry had just come off a few years of wild growth to reach a record $6.3 billion in revenue spurred by mobile games and free-to-play models. Though future outlook looked to stall, many analysts predicted that it would be Stadia’s subscription model that would be a catalyst for a big change in the industry, just as it has been for music and television.

However, as gamers excitedly rushed to Stadia’s launch in November 2019, they were suddenly hit by a grim reality: Stadia was not as advertised. The gaming platform launched with a meager library of 12 games. And those games didn’t look so great: The frame rate was inconsistent, and resolutions weren’t close to the promised 4K. Customers quickly realized that regardless of their connection speeds, they could not enjoy a smooth playing experience without input lag. Moreover, Stadia’s Pro subscription only featured one game at launch — Destiny 2, a game that had already been released two years earlier and was at the tail end of its growth cycle.

It seemed as if Google pushed out its cloud gaming platform unprepared and unready, rushing basic features and stalling on delivering advertised promises. By November 26, 2019, Destiny 2 only boasted 19,400 Stadia players (a fraction of the 330,000 online gamers on Xbox and 454,000 on PlayStation 4) and continued to fall to only 8,000 players by the following month.

Competition creeps in

Despite this rocky start, Stadia has steadily improved its service since its initial release. It now has 54 games available as of June 2020, with 22 more slated to be released in 2020, but the resolution is still dodgy, and it still lacks basic community features that sync with social media. There is simply not enough draw to get gamers to pay $9.99 per month for the service.

As a result, Stadia’s fumblings have paved the way for new entrants in the video game streaming market. Nvidia’s GeForce Now released in February 2020, and Microsoft’s xCloud is slated to be released in October 2020. Microsoft is incorporating a long list of well-known gaming franchises from Xbox while Nvidia is partnering with video game distribution platform Steam to deliver its library of 30,000 games to the cloud. This leaves Stadia in a precarious position with no strategy to set itself apart from new competitors. It is essentially stuck in a no man’s land without enough games or features to compete.

Where Stadia stands

Stadia currently has a very limited value proposition for its customers. It provides a good gaming experience for its players provided that gameplay is not affected by increased input lag, so it’s simply not Stadia’s strength to host online multiplayer competitive games where split seconds matter. Additionally, Stadia only boasts two games that are exclusives, which is hardly a draw for most gamers. This simply shows they are not investing enough in their platform and not listening to what their customers want. If Stadia keeps iterating and adding features and games at this pace, it will undoubtedly be driven out of the market by Microsoft, Nvidia, and other newcomers with exclusive IPs and better features.

A survey from Google’s Play store shows that Stadia customers crave more games and want better social connectivity and overall better features. Though things look grim at the moment, I believe Stadia can continue to innovate if it focuses on a strategy that leverages the strengths of its parent company Google, by acquiring exclusive gaming rights, and by investing in the single-player and casual multiplayer genres.

Exclusives, YouTube, and more games

Gamers want games, period. Almost 30% of respondents on the Google Play survey charted in Figure 3 expressed a desire for more games on Stadia. Having 45 games six months after release is simply not enough for a streaming platform. To put that amount in perspective, the video game distribution platform Steam has over 30,000 games for sale. However, the number of games alone is not enough. The games must be good, and they must be exclusive. Fortnite developer Epic Games, which is relatively new to online gaming, was able to acquire new customers as a result of its exclusive deals with developers for the distribution of their games. For example, Borderlands 3, a popular shooter, was released exclusively on the Epic Games platform for the first six months of its release, prompting any gamer who wanted to play it to flock to the platform.

Stadia can learn from this tactic by investing more in relationships with developers. Since Stadia’s strength is in single-player games, an exclusive partnership with Ubisoft (developer of the Assassin’s Creed and Far Cry series) or Take-Two Interactive would provide Stadia with the quality and exclusivity it needs. Additionally, other developers, like Square Enix, which develops highly popular single-player RPGs like the Final Fantasy and Kingdom Hearts series, are great suitors as well. Through this strategy, Stadia can at the very least push gamers to try their platform and judge it for themselves.

Stadia doesn’t yet leverage YouTube Gaming’s viewer base to actively promote its games nor engage its customers.

But games and exclusive deals are just the start. Microsoft and Nvidia can easily copy the strategy provided they have enough cash on hand. To truly set itself apart, Stadia will need a strategy that allows it to engage its consumer base. Luckily, Google owns YouTube, a platform that holds billions of hours of gaming content, hosts some of the most popular gaming content creators in the world, and is investing in its video game streaming capabilities by signing big-name streamers.

Currently, Stadia is lacking any meaningful form of gamer engagement or community. If the team behind Stadia has been paying attention at all this past decade, they will know that allowing players to connect will help create a positive feedback loop that increases the longevity of their games. Take Twitch for example, where over one million average concurrent users watch and interact with their favorite gamers, content creators, and each other while also discovering new games. This feedback loop where watching leads to playing and playing leads to watching is a powerful phenomenon that many developers have exploited to generate intrigue about their game.

Stadia doesn’t yet leverage YouTube Gaming’s viewer base to actively promote its games nor engage its customers. It’s an opportunity that Google should capitalize on because there are high-quality content creators on YouTube who are able and willing to promote Stadia and Stadia-exclusive titles. Stadia can leverage this mutually beneficial relationship by actively promoting streamers and content creators on Stadia as well and allowing gamers to donate to streamers and creators though the platform. This would lead to higher engagement from Stadia players and form communities around specific games, which is partially how Fortnite was able to become the massive hit it did. It is with this strategy that Stadia can truly differentiate itself from Microsoft and Nvidia as no other platform has the social reach that Google has.

But to truly carry out long-term growth, Stadia also has to start innovating within itself. This means developing custom games built exclusively to run on Stadia. Google has gotten off to the right start by hiring Jade Raymond, a Ubisoft veteran, to head its in-house development studio, Stadia Games and Entertainment. However, Google must remember to play to its strengths and focus on single-player and casual multiplayer games. Genres like trivia and party games like the Jackbox series and local co-op games like Overcooked have shown great promise in engaging not only the avid gamer but their friends as well. The possibilities for Stadia are there for it to be an innovative player in the streaming as a service space — it just has to start investing in its own infrastructure instead of solely relying on third-party developers.

I am a strategy consultant who writes about how companies can improve their strategic positioning in the market.

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