The global market for video games is expected to hit nearly $138 billion this year. And Alphabet’s (NASDAQ:GOOGL) Google division is making a play to capture a cut of that revenue. Yesterday, the company announced Project Stream. The service will allow players to stream AAA video games to a PC running its Chrome web browser, with all the work being done in Google’s cloud. No game console and no fancy PC gaming hardware required.
Project Stream is being described as a “technical test” at this stage. However, if successful it could shake up the video game industry. Having a shot at a cut of that $138 billion has the potential for meaningful upside for GOOGL stock.
Google Announces Project Stream
At the start of the year, rumors began flying that Google was working on a subscription streaming video game service, code-named Project Yeti. The company had apparently been at it for two years, looking for a way to break into a market dominated by Microsoft (NASDAQ:MSFT), Sony (NYSE:SNE) and Nintendo (OTCMKTS:NTDOY). Google’s hiring of Phil Harrison — a former Playstation and Xbox executive — to a VP role in January made it even more likely the company was working on something to take on the game console makers. Google has also reportedly been talking to game developers.
Now Project Yeti has broken cover. On Tuesday, Google officially announced Project Stream.
The service is designed to allow someone to play AAA games without the investment of a game console, or a costly gaming PC with a high-powered video card. Instead, Google’s cloud servers do the hard work, streaming the content via Google’s Chrome web browser to a Windows or Linux PC, Mac, or a computer running Google own Chrome OS. The hardware on the gamer’s computer isn’t important. They just need a 25Mbps internet connection, Chrome, and their choice of a keyboard and mouse, or a game controller — even a PS4 or Xbox controller.
Starting October 5, a limited number of gamers will be able to take part in what the company is calling a technical test of its new cloud-based gaming service. The game being streamed is Ubisoft’s (OTCMKTS:UBSFY) new Assassin’s Creed Odyssey. October 5 is the same date the game launches globally for traditional platforms, including consoles and Windows PCs. While the graphically-intense game plays at 30fps (frames per second) on consoles, Project Stream is reportedly targeting 60fps at 1080p resolution. If Google pulls it off, that would make Project Stream an even better playing experience than on a game console.
While the test is free, if it is successful and Google manages to sign up enough game developers, Project Stream would become a subscription-based gaming service. Players would pay a monthly fee for access, adding non-advertising revenue to Google’s coffers. Any diversification in revenue is good news for GOOGL stock. And it wouldn’t hurt to have more people downloading and using Google’s Chrome web browser, either.
Project Stream Faces Strong Competition
There are many technical challenges to overcome if Project Stream is to be a success and reach the stage where it is a viable service. Delivering the graphics expected from AAA game titles, at high frame rates and without any lag, will be difficult.
There is also competition. For example, Nintendo and Ubisoft will be streaming the same Assassin’s Creed Odyssey to the Nintendo Switch in Japan. Microsoft is also reportedly working on a streaming service called Scarlett that would leverage its Azure cloud to deliver high-quality games to a future, low-cost Xbox game console. Sony also has its Playstation Now subscription service that lets players stream games to a Playstation, or to a Windows PC.
However, Project Stream is more ambitious than existing streaming services. It’s not streaming older generation titles, it’s aiming to deliver the latest AAA games. It’s aiming to do so while delivering the full experience, including no-compromise graphics or performance. And it’s aiming to do so on in a web browser, eliminating the need for a console or specific computer hardware. We’ll find out in just a few days whether Google pulled it off, or if it’s back to the drawing board again for Project Stream.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.