Why Stadia Failed

Sep 30, 2022

Google is shutting down it's streaming game platform, Stadia. They are refunding all Stadia purchases – both hardware and software (most likely to break the meme).

The model makes sense (and I believe the demand is there):

  • Consumers don't need to buy specialized hardware.
  • Zero downtime spent downloading or updating games.
  • New business models and go-to-market: freemium, subscription, or licensing.
  • New markets: casual gamers, streaming creators, etc.

Some predictions on why it failed

  • Organizational dysfunction (high level) – hard to create cross-team integrations, e.g., between Stadia and YouTube, Chromecast, Chrome, etc.
  • Technical challenges – Latency is not a solved problem for most markets and requires massive external infrastructure and political movement (see Google Fiber's failure).
  • Wrong market – the best games don't need Stadia, but casual games could benefit from Stadia's low friction. However, Stadia launched with name-brand and high-end titles. Or even repurposed the technology to stream other applications.
  • Lack of content – maybe there weren't enough games? Time will tell how Microsoft's Xbox Cloud Gaming turns out, which has more titles (as Microsoft is also a publisher).
  • Poor business development – The game industry is new for Google, and navigating it might have proven to be too difficult. Much like the company has struggled in Cloud, the company's ad-tech DNA might not translate to gaming. Many game studios have a deep connection to the Microsoft stack – from graphics card drivers to developer tools. Google is a Linux shop.

Of course, maybe Google's management is acting too conservative and making a mistake by prematurely shutting down Stadia. In a bull market, Google might not have been faced with this decision. It will be hard for Google to rationalize getting back into this market now that they've left (see Google Code/GitHub).