Google entered the gaming market with Stadia a little over two years ago and had (did) have big plans to make the gaming platform a success. Plans have turned 180 degrees at least once during this time and the takeover of Activision Blizzard by Microsoft announced a few days ago could not remain without consequences for Stadia either. But how should Google react to this?
It is the largest acquisition in Microsoft history and the largest acquisition in the gaming industry overall: Microsoft has announced its intention to acquire Activision Blizzard and its numerous affiliated studios and brands. They put almost 70 billion dollars on the table for this and seem to be concentrating very heavily on the gaming area in the future. Certainly, with a focus on the Xbox and Game Pass, we are also well positioned with a view to the future.
In the industry, it is expected that Microsoft will start the next round of consolidation, which will put Sony in particular under pressure. But Google also has big plans with Stadia and sees itself as an alternative to consoles and gaming PCs. In both areas, a new giant is emerging with Microsoft, which was already extremely well represented. And Google will probably not be able to avoid cooperating with this giant for the Stadia success – which opens up another competitive market for the competitor’s Google and Microsoft.
It is quite possible that other industry giants will now check their account balances and go on a shopping spree. However, because Google often gets involved with smaller developers in order to have more leverage with the small gaming platform, this could become problematic. That could then also force Google to tie a whole series of studios closer to itself or bring them under its own roof.
Stadia started as a standalone gaming platform and is currently on its way to becoming a white-label platform. Just a few days ago, I took a closer look at this development (see linked article) and the course of events shows that Google wants to push game development far away. The closure of Stadia Games Studios, announced almost exactly a year ago, was a very clear signal.
Instead, Stadia will be offered as an infrastructure product that game developers can use to bring their titles to the cloud. But a company like Microsoft certainly doesn’t need to rely on Google’s cloud infrastructure. The same applies to Sony and Tencent, currently, the second largest game developer has little to do with Google. This means that the global top 3 and their dozens or hundreds of subsidiary studios have already been lost as customers.
For Google, the closure of Games Studios could subsequently prove to be a mistake. Even when the announcement was made, observers, including myself, rated this step as very unfortunate. Not only was the few months old strategy overturned, but the loss of trust in Stadia was also strengthened. And as is well known, the level of trust was not really high from the start. It may have had an impact on the number of users and the current development is going in a completely different direction.
Should Google also go on a shopping spree?
Strategically, it might not be bad at all if Google also had its big toe in the door and knew it had a larger game developer under its own roof. Sony and Microsoft are no different with their consoles. But a look at the world’s largest game developers shows that you have to react quickly before the market inflates too much. Sony, Tencent, Microsoft and Activision Blizzard are certainly out of the question. But then what is left?
Nintendo
The first interesting company to follow is Nintendo, and in fact, Google has been said to have an interest in the Japanese console manufacturer and game developer for over a decade. So far, the rumor has proven to be without substance, but maybe it would be very interesting, especially in the hot phase between Xbox and PlayStation, to have Nintendo, the supposedly hopeless third party under the roof and a “cloud console” (whatever they look like could) oppose. I used to think it was completely out of the question, but now the likelihood has increased.
Electronic Arts
Electronic Arts have much well-known game series in its portfolio. Even if the company has seen better days, these are the absolute driving forces for many a platform. I only have to throw the keyword FIFA into the room and you already know what the program is. What would the scenario be: buy Electronic Arts and make FIFA exclusive to Stadia only? Would be a very ugly move, but it would certainly make Google’s server glow for a long time. And EA has others of this caliber in its portfolio, especially in the sports sector.
Epic & Take 2
Epic would be an interesting variant because the Fortnite manufacturer has numerous other titles in its portfolio. However, from my point of view, that would not be that important strategically, because Fortnite time will also come to an end at some point. Take 2, on the other hand, is a very interesting company that is incorporating more and more studios and offers a very broad portfolio. Perhaps the best target for Google’s vast cash reserves.
Of course, you can continue Stadia without any acquisitions and try different strategies. But I think that the signs have changed with the Microsoft takeover and that the rules of the game will be even stricter in the future. Without its own title and as just one of many large companies, it will be difficult to compete against Microsoft, Sony, or even Amazon (which develops its own games). We can be curious to see if and when the next change of strategy is just around the corner and what it might look like.