During a keynote address earlier this week at the Game Developers Conference, Google (GOOG, GOOGL) unveiled Stadia, its video game streaming platform that allows players to play games on any device with Chrome with the simple click of a button. The company, which did not divulge details on pricing or its launch library of titles, said that the service will roll out later in 2019. Following the news, The Fly spoke to Stephens analyst Jeff Cohen for his thoughts on Stadia, as well as a bit on Electronic Arts' (EA) latest games.
INITIAL REACTIONS: Jeff Cohen said that his initial reaction to the announcement of Stadia was that it was "definitely impressive from a technical perspective." He said that "It clearly wasn’t a surprise, given that we’ve known for a while that Google is working on game streaming and they’d announced previously they’d be having a keynote. But I think one of the things that’s very impressive is that they pulled up a YouTube video and with one click, in five seconds you’re playing a game connected to YouTube. I think that’s pretty impressive.”
The analyst added that "a ton of questions" remain about what the business model will look like, how much it will cost, and the minimum level of internet speed required to run the service efficiently. "Because the most important thing about streaming, we think, is the potential to lower the barriers to entry and kind of get more gamers into the addressable market,” he said, noting that Stadia "has got to be cheap" and has to be accessible to a wide variety of players.
PUBLISHERS/DEVELOPERS: In its presentation, Google noted partnerships with Ubisoft (UBSFY) and id Software to bring AAA titles like "Assassin's Creed Odyssey" and "Doom Eternal" to the platform. When asked whether he believes a lot of major publishers and developers will be quick to embrace Stadia and release games on the platform, the Stephens analyst said companies would probably be willing to be on Stadia, noting that Google "didn't really tip their hat too much" to many game makers in their keynote address.
"I do think that a lot of the bigger publishers are going to want to be on the platform," Cohen said. "I do also think they have a lot of leverage in negotiations with Google because, as anyone knows who looks at previous console wars, these things are won and lost on the quality of content that’s on the platform. So, since Google needs Activision (ATVI) and EA more than EA and Activision need Google, there is the potential that Google might be willing to lower the 30% platform fee that is typically charged to the content provider. That would be a great tailwind, if that is the case, to a lot of the companies that I cover.”
PRICING: On the topic of whether the yet-to-be-announced pricing model for Stadia will determine the service's popularity at launch, Jeff Cohen said he thinks it will be a "major factor," especially since quality from streaming is going to be slightly worse than what one would expect from a typical gaming console. "In order to get people to adopt it, you would think they would have to price it pretty low, so that people are buying it as an add-on console to augment what they already have," the analyst said. "Or you’re bringing people into the environment that haven’t bought a console yet. So with either of those things you’re going to need it to be cheap, otherwise I don’t see why people would adopt it if they already have an Xbox One (MSFT) or a PS4 (SNE).”
PS NOW/GAME PASS: When asked if Stadia will likely have an impact on other console-based game distribution services, such as PlayStation Now and Xbox Game Pass, the Stephens analyst said he thinks it's too early to say since "a lot of the things that we don't know are going to kind of determine that answer." Cohen noted that if Stadia doesn't have major titles from Activision, EA, or Take-Two (TTWO), it'll be hard to see people adopting it, though he added that it's "kind of impossible to answer" since we don't know the pricing model of Stadia just yet.
EA: On a separate note, The Fly asked Jeff Cohen if he believes the potentially rocky launch of EA's latest online live services shooter "Anthem" will have much of an impact on the company's bottom line, particularly given the success of "Apex Legends." "“It still matters," he said. "One thing that Anthem’s rocky launch does prove is that, in this industry, it’s really hard to launch new IP. So that almost makes the success of Apex even more impressive. Apex is sort of using IP from the Titanfall universe, but it’s very much its own different experience. So, I think that it shows how impressive Apex is. But I think it’s way too early to call Anthem a failure. The launch has definitely been rocky, but a lot of the actual preliminary sales data is pretty decent.” Cohen added NPD data that 'Anthem' had the second biggest launch month sales for any BioWare-developed game outside of 'Mass Effect 3,' and that the developer has done a "really good job" being responsive to criticisms from the gaming community. "I do think that game is going to have a chance to morph into something a lot more successful down the road," he said.