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Google, Microsoft could disrupt the entire video game industry

Nick Monte

Software and hardware developers are slowly wrapping up the 2019 Electronic Entertainment Expo (E3).

While gamers are still talking about Nintendo’s (NTDOY) “Zelda” trailer, Keanu Reeves’ “breathtaking” moment, and “Doom Eternal,” it’s Google (GOOG) and Microsoft (MSFT) that may have dropped the biggest bombshell announcements.

While appearing on Yahoo Finance’s “The First Trade,” Stephen Totilo, editor-in-chief of Kotaku, said people are still buzzing about game streaming.

“Think of it as Netflix compared to watching a movie off of a DVD,” Totilo said. “In this case, instead of having a console at home, you would have just a connection to a remote server somewhere, and you’ll be playing, pressing buttons on a controller, but essentially the console running the game is far away at a server farm and then it zaps the graphics back to your TV. They can do that loop quickly enough that they say the gaming feels as good as if you’re playing a local machine.”

This new platform can transform the gaming industry. Maybe not tomorrow, but the potential is there.

Cloud gaming platforms

Google recently announced its new cloud-based video game streaming service called Google Stadia. The service – no gaming consoles, discs or downloads – will have a soft launch in November. “And we’ve seen Microsoft get in on it as well with something called ‘Project XCloud.’ I tried it,” said Totilo. “It ran fairly smoothly. Not as smoothly as if I had a console. It’s an exciting and potentially disruptive thing – and we’ve seen Microsoft and Google most aggressive about it.”

Another entry in the space is Apple: Apple Arcade will put games in front of consumers no matter where they are, and is set to roll out in the fall.

This revolutionary push may arguably be the biggest change the industry has seen since online multiplayer formats hit the scene. While there’s a chance the video game industry can top the $43.8 billion in revenue it hit last year, the news isn’t good for everyone.

“It’s really rough for GameStop (GME), because it’s not just game streaming, which is still a maybe on whether that will catch on. But it’s just downloading video games, which is more and more how these big publishers are selling things,” Totilo said.

He put the video game retailer’s troubles in perspective by adding, “On top of which you have phenomena like Fortnite, or Minecraft before that, which I don’t even know if you can buy a boxed version. These are the biggest games out there and they don’t get sold at a GameStop,” he said. “It’s hard to see what it is that GameStop can do to turn things around.”

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