Four reasons why Google Stadia failed – and what the cloud gaming industry can learn from their mistakes

by Begoña Fernández-Cid, co-founder and CMO at Nware

Google Stadia was recently forced to deny reports that it was shutting down following online rumours and community chatter. The denial follows a rough twelve months for the business, seeing the departure of key team members who were leading the charge in making the service a success and the announcement that Google was abandoning plans to make its own gaming titles for the platform by closing down its development studios focusing instead on third party partnerships.

So what went wrong for Google Stadia and why are new platforms in the cloud gaming arena such as Nware growing at pace? Even with the huge technological brains and massively deep pockets of Alphabet Inc. behind it – and what can the rest of the cloud gaming industry, as well as entertainment in general, learn from their mistakes?

Google’s strategy of releasing as many short-term projects as possible and hoping one of them takes off quickly is one approach to launching products. However, this tactic does not necessarily go well with innovative industry-changing and B2C consumption-based technology as it takes time to evolve, develop, test and adapt in the market – as well as go through the learning curve at user, stakeholder and provider levels. Google Stadia’s launch in November of 2019 kicked off with a big wave of hype months before (with millions spent in marketing and influencers) but the expectations of the whole gaming industry exceeded the final execution. It seems it was too soon to announce and launch, which resulted in a rocky start on Google Stadia’s part and a reluctant attitude towards cloud gaming from the gamers’ perspective, who had to learn what cloud gaming was all about.

Google Stadia’s approach consisted of creating a closed ecosystem with the same mechanics of a game console, which meant focusing on owning the whole value chain, from investing in content creation with their own game studios, to developing their digital service on their Linux operating system, to using their own Google Cloud infrastructure, to manufacturing physical hardware.  The fact that Google decided to discontinue their game development and closed their game studios later in 2021 meant that this approach was too large to tackle in the first place, precisely because Google is not a game development expert. Furthermore, Google started to shift focus towards a B2B side of game streaming with white-label offering.

Since the November 2019 launch, Google focused on generating physical sales quickly. Along with their cloud gaming service, users had to purchase the Stadia gaming controller as well as the Google Chromecast to be able to use the service. This is as if Spotify or Netflix dedicated efforts in selling a physical device along with their streaming service for users to be able to watch movies and listen to music, instead of delivering a fully cloud-based service and give users the option of purchasing (or not) a nice-to-have accessory to boost their experience. Isn’t the whole idea behind the concept of cloud gaming to avoid the need for purchasing any physical device mandatorily to be able to play video games? This doesn’t only apply to expensive gaming PCs and consoles, but also any accessory required for the platform to function.

With sales of traditional consoles seeing a drop in the first six months of 2022 due to supply chain problems, the demand is still there for gaming experiences and although Stadia may have not taken off in its initial launch, cloud gaming is still seeing an increase in users. Predictions on the growth of the cloud gaming market range from 58 million global subscribers in 2024 (Newzoo, April 2022) to 350m users by 2025 (Analysis of the Global Cloud Gaming Market, May 2022).

New platforms like Nware provide access to experiences via the cloud without the need for users to purchase expensive hardware to play video games and gives users access to over 20,000 titles on Steam, Ubisoft and Epic Games by syncing their game libraries with top games including Call of Duty, Rocket League and League of Legends. They can also access free to play blockbuster titles including PUBG: Battleground, Counter Strike – Global Offensive, Apex Legends, Destiny 2 and Dota 2.