Google Takes Aim at Multi-Billion-Dollar Video Game Opportunity With Launch of Stadia

The video game industry just got yet another entrant, and it isn’t a startup you have never heard of. Alphabet Inc. (NASDAQ: GOOGL), via Google and YouTube, has announced the launch of Stadia.

The company that most investors still refer to as Google is launching a streaming cloud-based video game platform, targeting the highest quality games on the lowest powered machines. They are targeting phones, laptops, desktops and even TVs. Anything that is connected (but maybe not your connected refrigerator). Google also plans to sell a special Stadia controller for the system.

The target here should be rather obvious — anyone and everyone into games. With industry revenues of $140 billion or so, dominated by the likes of Sony Corp. (NYSE: SNE) and Microsoft Corp. (NASDAQ: MSFT) for their respective PlayStation and Xbox consoles, as well as PC gamers. Microsoft is already set to launch its xCloud for a choice of how and where to play games ahead of an upcoming and expected Xbox console refresh cycle.

Advanced Micro Devices Inc. (NASDAQ: AMD) saw its shares rise nearly 10% after it was disclosed that AMD will help to power the Stadia graphics in the cloud.

The move will allow gamers to get access through YouTube and it will not require expensive systems to be purchased. Gamers who are watching a video of a current game will be given the option of joining now and can be playing within a few seconds. So much for long game downloads, system updates and expensive purchases for titles. Check out the total recent YouTube stats.

The website says:

The future of gaming is not a box.

Introducing Stadia, a new gaming platform from Google for playing AAA video games across all kinds of screens.

One interesting aspect of the usage here is that the data center access is the platform, so any game might be at their desk, and then moving to their phone, and then on to a laptop or other devices. There also is going to be a capture button that lets gamers share their games so other people can watch. A Google Assistant button will also allow gamers to speak with a microphone for in-game features.

Google’s Stadia will also support 4K games with HDR, but it also will target games with up to 8K resolution in the future. If you haven’t heard of 8K yet, no one has any access to nor use for 8K at the current time.

Id Software was said to be building “Doom Eternal” for Stadia and other developers will be developing games as well. Meanwhile, the game titles have been low and it remains unclear if the traditional video game studios will jump on board.

No costs have been announced, nor has any revenue model been announced. Stadia is set to launch in 2019 in the United States, as well as in Canada, the United Kingdom and most of Europe.

AMD shares were last seen trading up 11% at $25.84, while Microsoft was flat at $117.54 and Sony’s American depositary shares were challenging the lows of the day and down 0.55% at $45.83.

Alphabet shares were last seen trading up 1% at $1,201.00 on Tuesday ahead of the closing bell.

Shares of Activision Blizzard Inc. (NASDAQ: ATVI), with the company being a top earnings season winner, were not harmed on the news as its shares were up 3% at $46.31. Electronic Arts Inc. (NASDAQ: EA) was last seen trading lower by 2% at $97.63.

Zynga Inc. (NASDAQ: ZMGA), which specializes in free and “freemium” mobile games, was down just 0.75% at $5.31 late on Thursday. It was up at $5.38 before the details of the Google game launch.

It remains up for grabs how much Alphabet can or will add to earnings and revenues from the launch of Stadia. Alphabet’s total company revenues were $136.8 billion and operating income was $31.4 billion in fiscal year 2018. Analysts in the Refinitiv universe of sell-side analysts are already projecting total revenues of $163.5 billion in 2019 and $192.5 billion for 2020.

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