By CCN Markets: In the last 12 months, major technology companies have rushed to dive into video game streaming. Microsoft’s Project xCloud is in testing, Google Stadia launches in November, and Samsung just unveiled the PlayGalaxy Link. Sony has PlayStation Now, and Amazon is rumored to be entering the fray too.
Two Reasons Game Streaming Services Will Fail
Each company is making a sizeable financial bet on game streaming. However, it’s difficult to envision any outcome in which streaming services don’t flame out spectacularly.
In fact, it’s far more likely that highly-touted streaming projects like xCloud and Google Stadia prove to be completely dead on arrival.
1. The Pool of Potential Gamers Is Too Small
Any product succeeds or fails because of how many – or few – are willing to pay for it, and with game streaming, the pool of potential players is incredibly small.
An Akamai study from 2017 found that just nine countries – South Korea, Norway, Hong Kong, Sweden, Switzerland, Finland, Singapore, Japan, and Denmark – have average internet speeds above 20Mb/s, which is what Google suggests can run Stadia smoothly.
In 2019, Stadia will launch in the United States, the UK, and most of Europe, meaning that four of the nine jurisdictions with internet speeds fast enough to use the service won’t have the option to use it until 2020 at the earliest.
1. Rich Kids Can Buy Expensive Consoles; Poor Gamers Can’t Afford High-Speed Internet
There’s also the larger issue of just who game streaming is for.
If your device is so old that it can only run Doom and can’t afford a high-end model, game streaming promises a solution.
On paper, anyway.
Affluent gamers in countries with fast internet connections can afford expensive consoles and high-end PCs. Those in less affluent nations have access to the devices but may not be able to afford the subscriptions.
At $9.99 for Stadia, or $19.99 a month for PlayStation – plus the price of an often-expensive high-speed Internet connection – these services are going to be too expensive for those who would be best served by them.
There are 444 million mobile subscribers in sub-Saharan Africa, the fastest-growing mobile market in the world, and data is cheap, with the Democratic Republic of the Congo offering prices as low as $0.66 for 1GB. However, these aren’t low enough to make Stadia, which uses 4.5GB of data an hour at the minimal setting, affordable.
Xbox Boss Issues Surprisingly Realistic Forecast for xCloud, Stadia & Friends
Xbox boss Phil Spencer kept it surprisingly realistic when asked about game streaming while speaking to GameSpot in a recent interview:
“I think this is years away from being a mainstream way people play. And I mean years, like years and years.”
Remember: Phil Spencer and Microsoft have a massive financial interest in video game streaming. Yet, comparing it to Netflix‘s 20-year quest to make TV and movie streaming mainstream, Spencer said:
“I think game streaming will get there faster than 20 years, but it’s not going to be two years. This is a technological change. While it seems like it happens overnight, it doesn’t.”
Game streaming isn’t ready for the big time, not because the market won’t eventually be there, but because there’s no way it will be there anytime soon.
If Google and the other companies behind these streaming services can afford to wait and subsidize massive loss leaders, then they may stand a chance. But if not, it won’t be long until xCloud, Stadia, and their peers crash and burn.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.
This article is protected by copyright laws and is owned by CCN Markets.