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Stadia Is Going the Platform Route

When Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) first announced the cloud gaming project Stadia, it shook the video game world -- but left more questions asked than answered. We knew that Stadia would be a cloud gaming technology, but we didn't yet know how much the hardware would cost or how much Google would charge for games or subscriptions. It was easy to assume that, like Microsoft (NASDAQ: MSFT) and Sony (NYSE: SNE) before it, Google would put an exclusive streaming platform on its device and charge users by the month. It would compete with other such services to be the so-called Netflix (NASDAQ: NFLX) of video games. And that would be it -- right?

Not quite. After Google's presentation at E3, the most important video game trade show of the year, Stadia is starting to look a lot less like Netflix and a lot more like Amazon's (NASDAQ: AMZN) Channels or Apple's (NASDAQ: AAPL) iOS platform. Here's why.

A man plays video games
A man plays video games

Image source: Getty Images

How Stadia will work

The headlines of Google's E3 presentation bear out some of our assumptions. The device is a cheap "console killer," a controller-only setup that costs $69 per unit. (Google is probably selling its Stadia controllers at a loss.) Users can use the controller to cast their games to Chromecast (sold separately, of course).

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Google will also have its own video game streaming service, as expected. It will launch with more than 30 games and will cost $10 per month. The price compares favorably with those of existing subscription services from Sony (PlayStation Now, $19.99 per month) and Microsoft (Xbox Game Pass, $9.99 per month for the console-only subscription).

But here's where things get interesting. In addition to its own streaming service, Google is planning to offer third-party subscriptions through Stadia. Google was relatively mum on the details of these other services, but one was announced at E3 shortly after Google's presentation: Ubisoft, a French video game publisher, will offer a $14.99-per-month subscription service that will be available on PCs and Stadia.

This makes Stadia look a little less like an all-in-one subscription and hardware solution from Google and a little more like, say, a Roku (NASDAQ: ROKU) device, which plays host to lots of different apps. Perhaps the best comparison is to video streaming platform Amazon Channels: Amazon has long allowed its streaming video customers to add premium subscriptions to services like HBO and Showtime through their Amazon accounts and to play content from all of their subscriptions on Fire TV devices or within the Amazon Video app on other devices.

Another comparable idea is Apple's TV app, which aggregates premium subscriptions and has reserved a starring role for Apple's own streaming video-on-demand subscription service. Swap the Apple TV or iPhone for a Stadia controller, Apple's video service for Google's video game one, and third-party video subscriptions for third-party gaming subscriptions, and you have Stadia: another platform that is positioned to exact tolls from outside services.

Stadia's approach stands in contrast, at least right now, to what the console giants are doing. Microsoft's Windows operating system can run various subscription gaming services, but its Xbox One console offers just one: Microsoft's own Xbox Game Pass. Similarly, Sony's PlayStation 4 is monogamous on streaming with Sony's subscription service, PlayStation Now.

A platform-focused future for video games

The role of "hubs" that collect smaller streaming services and platforms that tax apps that run on them (and the overlap between these two things) is something that I've written about before in the context of video streaming. It's starting to look like those subjects will be relevant to video game streaming, too. Google's Stadia is three things: a subscription service, a device, and a platform. The last of those may prove the most important.

More From The Motley Fool

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Stephen Lovely owns shares of Amazon, Apple, and Netflix. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Microsoft, Netflix, and Roku. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.