Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google has high hopes for its Stadia video game streaming service. It promises to deliver PC games at resolutions up to 4K with HDR and frames rates of up to 60 fps. No gaming PC or console needed, just a TV with a Chromecast Ultra, Wi-Fi and a controller. Players can also go mobile with their laptop, tablet or smartphone.
The initial launch price is $130 for a controller, plus three months of premium service and a subscription rate of $10 monthly after the free period. Premium games cost anywhere from $20 to $60. A free tier with 1080p video is expected later this year (games still cost extra).
Sounds like a game-changer with the potential to disrupt the PC, console and mobile gaming industries. Except, so far, everything hasn’t gone quite as smoothly as Google had hoped. Complaints from early adopters include a small selection of games, doubts that the full 4K resolution is being delivered and poor performance on many home Wi-Fi networks.
If Google Stadia flops — and that’s by no means a certainty at this point — it is bound to have a ripple effect for tech stock investors. These five stocks in particular are likely to benefit.
Tech Stocks That Become Winners if Stadia Flops: Apple (AAPL)
Apple (NASDAQ:AAPL) frequently finds itself in competition with Google. The company revolutionized mobile gaming with the one-two punch of the iPhone and App Store. Apple helped to turn mobile gaming into a $68.5 billion market, and that has had significant upside for AAPL stock.
The company’s latest move was last year’s launch of the Apple Arcade video game subscription service. If Google Stadia fails to catch on, look for Apple to push its subscription as the proven mobile gaming service, with low cost ($4.99 per month), exclusive games, offline capability and a superior experience on AAPL devices ranging from the iPhone, to MacBooks or an Apple TV hooked up to the living room television.
Nvidia (NASDAQ:NVDA) potentially wins in two ways if Google Stadia falls flat.
The most obvious win is sales of graphics cards. NVDA stock is driven by graphic card sales, and the biggest segment there is gamers. If Google Stadia is successful and they no longer need gaming PCs with high-end graphics cards to play games, that could hurt Nvidia’s revenue.
Nvidia also launched its own cloud gaming service this week. Nvidia GeForce Now uses the same basic premise as Google Stadia — the company runs PC games in the cloud and streams them to your device — but there’s a big difference. NVDA’s version costs just $5 a month, and it works with the PC games players already own (hundreds of titles are supported), so they don’t have to pay for each title as they do with Stadia. If Stadia users rebel against paying for games (or the low selection of titles available), Nvidia GeForce Now is there to scoop them up.
Microsoft (NASDAQ:MSFT) also has the potential for two wins if Stadia fails to catch on.
Like Nvidia, Microsoft has its own cloud gaming service. Project xCloud is currently in preview. Instead of PC game titles, it hosts Xbox games on cloud servers, then streams them to Android smartphones and tablets. The more modest bandwidth requirements of Xbox games could make this one a winner if Google Stadia can’t master those 4K PC games.
The bigger win — and one that will have a material impact on MSFT stock — is the holiday launch of the company’s new Xbox Series X game console. If Stadia takes off, that could reduce the appeal of console gaming (part of which is based on a lower cost than buying a gaming PC). If Stadia falters or fails to catch on, the launch of Microsoft’s ultra-powerful console is expected to help the company’s gaming revenue surge in the holiday quarter.
Sony (NYSE:SNE) is in a similar boat to Microsoft. The company is launching its next generation PlayStation 5 game console just in time for the holiday sales season.
PlayStation sales have been slowing, and that has had a material impact on Sony’s revenue. In Q3, PlayStation revenue dropped 20% year-over-year due to slowing PS4 and games sales. Investors are looking to the fall, when the successor PlayStation 5 will launch. With next generation power and exclusive launch titles, it is expected to be a hit, re-igniting PlayStation revenue and boosting SNE stock.
A successful Google Stadia would be bad news, with the potential the streaming game service could raise doubts about the wisdom of buying a console, and cut into PS5 sales.
Nintendo (OTCMKTS:NTDOY) is one of the companies that’s most at risk if Google hits a home run with Stadia.
After several disastrous years that saw NTDOY stock drop by over 84% from its Wii days, the company finally found success again with the Switch. The key appeal of this console is mobile gameplay, with the option of docking it for a big screen TV experience. Google Stadia is pitching a similar experience, but using a smartphone, tablet, or TV, with PC games that offer far superior graphics to Switch titles. Gamers choosing Stadia over the Switch would be devastating for NTDOY.
Nintendo will be watching consumer reaction to Stadia carefully, and will breathe a sigh of relief if Google’s game streaming service fails to take off.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.