U.S. Markets closed

Can Google Create the Netflix of Gaming?

Brad Stone
Can Google Create the Netflix of Gaming?

(Bloomberg) -- 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.”

This article also ran in Bloomberg Technology’s Fully Charged newsletter. Sign up here.

And here’s what you need to know in global technology news

Web platforms scrambled to respond to a barrage of horrific footage from the mosque attack. Facebook and other internet giants faced a renewed backlash for their failures to police content on their platforms. Despite Google’s boasts of its AI prowess, YouTube fared no better in rooting out video from the New Zealand shooting. Reddit responded by banning two popular fringe groups from the site, BuzzFeed reports. But there was one group eager to air the footage: the campaign of Turkish President Recep Tayyip Erdogan, which used snippets in an apparent bid to galvanize his conservative base ahead of local elections at the end of the month.

States are laying groundwork for an investigation into Google. A group of state attorneys general are looking into possible antitrust or consumer protection violations, though it’s unclear whether the preliminary effort will develop into legal action.

Qualcomm won its first jury trial against Apple in the U.S. The verdict means the chipmaker can ask a judge for a sales ban, which would cover older models of the iPhone.

A startup wunderkind and author of a self-help book was indicted on a sexual assault charge. Brian Wong, co-founder of online advertising startup Kiip, was indicted by a grand jury in Texas over allegedly raping a woman during a South by Southwest festival. Wong denied the charge, and his company asked him to take a leave of absence.

Uber and Lyft may yet save the year from the worst for IPOs since 2016. Uber’s offering alone would eclipse the 21 U.S. IPOs that have so far raised $1.6 billion. And Lyft is pressing ahead with its own deal, which will use a contentious stock structure that gives company founders outsized power. It could announce its initial trading price, and number of shares it plans to market, as early as today. 

A group of digital archivists are racing to preserve Google+ posts. The Internet Archive says efforts are underway to save public posts before Google shuts down its perpetually unhip social network for good, the Verge reports. The content should live on in a virtual museum alongside your favorite GeoCities neighborhoods.

Join Bloomberg's flagship tech event, Sooner Than You Think 2019, on June 11 to 12 in London. Learn and be inspired by the world's most influential tech leaders. View the website here and apply to attend.

(Corrects country where the political campaign used footage of the mosque shooting in the first brief item.)

--With assistance from Gerrit De Vynck.

To contact the author of this story: Brad Stone in San Francisco at bstone12@bloomberg.net

To contact the editor responsible for this story: Mark Milian at mmilian@bloomberg.net

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.