During an expected announcement on GDC, Google finally revealed their plans for entering the AAA game market, presenting their ambitious platform Stadia with impressive streaming capabilities previously tested in October’s Project Stream trial run.

But what does this announcement mean for the game industry?

The End of the Console Wars

The console is a pretty simple concept, yet highly disruptive at the time of its conception: it’s a box with quality hardware and ports that connects to your television and acts a separate system than the set it’s connected to.

It was preceded by the Arcade, coin operated machines that provided interactive entertainment and still captivate a fan base of enthusiasts to this day, but at large it’s considered completely obsolete, as games itself grew enough in size to make the need for many quarters an unnecessary hurdle for the experience. It’s maintenance and repair was completely dependable on the machine’s owner and its revenue came directly from the players who needed to physically access the place where the arcade was at.

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While the Arcade was an almost carnival-esque novelty that drew in crowds and created a unique urban culture that lasted more than two decades, the console’s rise provided the fun and challenge pursued by avid players from the comforts of their home.

That in itself was responsible for the meteoric rise of gaming all over the world, since the accessibility and choice brought by the consoles to the consumers far surpassed the likelihood of finding an specific arcade machine in your local neighborhood shopping center, which wouldn’t stop machines from being heavily distributed around the world in the 90s, which, while the most logical decision to combat the increasingly popular domestic gaming, only contributed to the Arcade’s downfall.

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The consoles didn’t have the horsepower built into the Arcade machines’ hardware, but its initial cartridge system offered variety and the fixed price offered a more cost-effective entryway to the videogame craze that took over the world in that era, not to mention that the marginalization of Arcade culture also led parents to prefer their children to stay at home, away from the streets’ dangers.

Consoles were a great business model for the game companies, despite Arcade purists’ complaints at the time. Companies would sell the console itself, the game cartridges, the needed controllers and other peripheral devices (I.E. light guns)to replicate the authentic arcade experience in a domestic environment. 

Developers had to follow a very strict set of limitations from the companies to produce a game cartridge, which inevitably created a market that depended entirely upon Japan’s technological advancements and resolutions to be propelled forward.

Console gaming inevitably created a few characteristics that permeate the gaming industry to this day, which includes the constant race for new generations of hardware, as companies invested heavily in R&D to outpace each other and also the cultivation of praise from consumers, who chose their console products based on a mix between the use of said technology and intense marketing campaigns that pulled out all stops to take shots at the competing product while hyping itself. This was also the beginning of hype culture, as the Fear of Missing Out (FOMO) evolved from a common financial term into the core of a fundamental strategy to sell new pieces of technology to increasingly passionate consumers. And then the Console Wars began.

A user’s choice of console inevitably restricts the gaming options to the ones authorized and approved by the console maker. This would also restrict developers from catering to the whole market, as sometimes the limitations would include exclusivity clauses which would turn half of their target consumer base into ashes within the stroke of a pen.

Consoles would be the ultimate gatekeepers, with fixed structural design and hardware, no room for improvement and no flexibility.  This would also be responsible for the rise of high-end PC gaming, as customization and upgrades offered by personal computing were easier and more constant than the usual console generation cycle.

There were many financial barriers to the gaming experience and third world countries were hit the hardest, with outlandish import taxes stacking on top of the already hefty prices that consoles and games were going for. When said consoles would all eventually switch from cartridges to CDs at the early 21st century, this would also create the piracy culture that flooded these countries in the same age.

Image result for ps2 piratao

Yet, even if one were a consumer of pirate games in the early 2000s, that person would still need a console to play it. It was no surprise that the uncontested leader in console sales of that generation was the Playstation 2, the most pirated system by a large margin, and the author of Sony’s resounding success in the domestic gaming market.

Ultimately, it was the rise of multiplayer gaming on consoles that provided a heavy blow to the pirate markets, as the many checks and balances that a server can provide on a copy of the game make sure it is a legitimate one, putting pirate players at risk from being banned and losing their precious account, on which are stored all the achievements and social contacts that are an integral part of the online gaming experience.

The current generation, represented by the Sony Playstation 4, the Microsoft Xbox One and the Nintendo Switch is still impacted by the consumer’s choices, even with the increasing efforts to support cross-play, on which certain games would allow players to join the same session, regardless of console choice.

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God of War

Sony, still the uncontested leader of this generation, is the one fighting with teeth and nail against this trend, investing heavily in its exclusive games hoping to reinforce the decisions that players made when choosing their products, like the amazing Spider-Man and God of War, released in 2018 to thunderous fanfare.

This generation is also represented by digital game libraries, on which users can purchase and download games at their convenience, requiring only basic management of files in their console’s internal hard drive when willing to play it. It was a big change frowned upon by collectors of physical media, as even their copies of games required some amount of downloading to consoles’ internal disk storage. 

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After figuring out that it reigned upon a divided market, the legendary Nintendo unveiled the Switch, a console built to bridge the gap between their portable and domestic gaming consoles, featuring a connection with the television set as a domestic console would and also a smaller embedded touchscreen to carry the game on the go, as a portable system would. 

Meanwhile, Microsoft would position itself closer to high end PC gamers by making its Live Marketplace compatible with both computers and its Xbox One domestic console, an effort to harvest users of Valve’s digital game marketplace, Steam. Microsoft also made a point to invest in the most powerful hardware of this generation by presenting the Xbox One X, but its efforts were blundered by the flood of PS4-exclusive games developed by its in-house studios. Unsurprisingly, Microsoft then shifted its focus on acquiring studios to bolster their in-house production.

The lines between consoles were still clearly divided, and new rumored efforts by Sony and Microsoft telegraphed a possible future move to a streaming based future, one where games would be staying at the cloud servers and high speed connections would broadcast the data directly to the console box, then avoiding the backlog management in an internal hard drive and abandoning the product based model of sales to a subscription based model in order to provide access to a bigger amount of interactive experiences.

All talks regarding this technology were greeted with broad skepticism from the community of players, as many questioned if there would ever be connections with enough high speed to support the behemoth of data involved in streaming a game with the least bit of lagging delay between input and action.

That same skepticism was there when the first rumors appeared regarding Google’s new venture into the gaming market. As patents for a possible controller were leaked early, most enthusiasts expected to see an actual game console that would support the streaming capabilities rumored to be the main feature.

What many didn’t expect, however, was that the presentation would remove the need for consoles altogether.

The Paradigm Shift

When Google proved it was possible to broadcast a game continuously to any device that had access to its Chrome application, with minimal delay between input/action, and within 5 seconds of launching it, there was a collective gasp in the presentation floor. 

As Stadia’s unveiling unfolded, it didn’t take long for the audience to realize the platform was built to solve a clear problem no one had the capacity to solve until now.

The console, an industry standard for more than 30 years, is at great risk of being replaced by data centers.

It’s a very simple math: There are more Chrome users than all console owners combined.

By removing that gate barring the entry of newer players, it unleashes a tsunami of users that will undoubtedly be playing AAA games anywhere, at anytime, without a box, or a specific portable device.

As rumored, Stadia will have its own peripheral, a controller built to improve the usage of this platform-as-a-service, but the service is still compatible with every controller that is usable on a console in the current generation, lowering even further the cost-of-entry for those looking at the next step in gaming. 

For developers, they are offering the full capability of hardware from their data services, less restrictions than the current ones employed by the reigning game companies and partnerships with big studios allowing use of their engines. The barrier for entry in game development just got lowered big time, now one wouldn’t even need a high end computer to create their own game.

There are still many tribulations ahead of this ambitious project. As it is right now, the service doesn’t have pricing information available, nor a specific launch date other than a vague 2019 release window.

And its biggest achievements, high-end graphics with 4K resolution, 60 frames per second and almost no input lag whatsoever, won’t even be proven to be conquered until the service is in the hands of happy consumers. 

Sony currently offers a streaming service called PS Now that offers access to its classic game library through a subscription model, but many users aren’t still completely satisfied with its performance. Sony won’t be present at the E3 2019 conference and there is no official announcement in sight, but many rumors point out that this will be the year of the unveiling of its next generation console, the Playstation 5. 

It doesn’t look like the traditional Nintendo has any plans on creating game streaming services, but the company still garners a loyal player base and fan-favorite franchises that kept its revenue stream flowing despite being on the tail-end of hardware compared to its competitors. 

Microsoft is just too busy trying to outdo its competitors’ successful trends to create their own new way of flipping the script. Or are they…?

Announced last year was xCloud, Microsoft’s step forward in the platform as a service market:

Seems familiar?

Project xCloud’s reveal last year was more of a vague heads up than a presentable reality like Stadia’s earlier this week, but Microsoft head honcho of gaming Phil Spencer published this memo right afterwards, saying that the recent announcement only validates his team’s efforts:

We just wrapped up watching the Google announcement of Stadia as team here at GDC. Their announcement is validation of the path we embarked on two years ago.

Today we saw a big tech competitor enter the gaming market, and frame the necessary ingredients for success as Content, Community and Cloud. There were no big surprises in their announcement although I was impressed by their leveraging of YouTube, the use of Google Assistant and the new WiFi controller.​_

But I want get back to us, there has been really good work to get us to the position where we are poised to compete for 2 billion gamers across the planet. Google went big today and we have a couple of months until E3 when we will go big.

We have to stay agile and continue to build with our customer at the center. We have the content, community, cloud team and strategy, and as I’ve been saying for a while, it’s all about execution. This is even more true today.

Energizing times.

Phil

So we can expect big announcements on the upcoming E3, especially now that the Big 3 are joined by a New Challenger.

Branding VS Accessibility

If Stadia brings what it promises, there will be no choice for the gaming companies but to adapt to the PaaS (Platform as a Service) model by either joining Google Cloud, Microsoft Azure or its biggest competitor Amazon Web Services.

Albeit, there is a high probability that the standards the Stadia team are working on are about to be surpassed by the next generation, if the technology that keeps it working evolves at its current pace, console gaming just got closer to retirement.

Do you disagree?

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