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Google Stadia and how Google is managed by monkeys

jorgecc profile image Jorge Castro Updated on ・1 min read

Discussion

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As much as I don't think your title is fair I also don't get what point your trying to make here 😅

Are you saying there is no profitability in selling software a service? Because there's much evidence that's not true (well there's also evidence that execution and timing are paramount, see the gap AWS has on the other players).

Are you saying that Google is doomed to fail because it's not a gaming company?

I see Stadia as a platform, as Spotify is a platform for music. If Spotify had failed to secure rights to stream songs from the music industry, it would have died instantly.

If Google manages to secure deals to stream videogames, why should it fail? They have the money, the expertise to work side by side with gaming companies to adapt games and the server infrastructure to reach everybody.

I'm not saying it's going to work for sure, but I'm saying... let's wait, I don't know

 

I think your reasoning is flawed.

The numbers are probably not right for Google. They can pretty much do magic with load balancers, AI that outclasses humans for server park management, building their own solar farm etc. Real usage is probably far less than 1/2. They already have the infrastructure etc.

Taxes are applied on profit, not revenue, and are a percentage. They are frankly irrelevant.

Finally, this endeavor simply does not need to be profitable. Tech companies are very keen on maintaining their dominant position and cornering new markets. It's fine, therefore, if a sub-company isn't making money, so long as it protects the main enterprise. E.g. why Facebook acquired Whatsapp, Google bought Youtube and Microsoft bought influence in Linux development.

I don't like it either, but I'm fairly sure Google has more business sense than both of us combined.

 

tsk tsk

As I said, Google at most is saving 20-30% in some custom hardware and they have a cheap discount on the electric bill but that's it. Everything else is doubled, including personal, debts (it's amazing how big companies only moves on debt, i.e. 3-5% of the spend, not profit goes to the bank), licenses and such. But let's say that technically it's a good business but, GAMES. Of course, Google could talk with EA (read, Evil-EA) or Ubisoft (i.e. Ubibug) but they could give some old games for a cheap (and new games for a profit).

Google is managed by a monkey, a monkey that is not even able to count to banana.

 
 

Our competitor charges $99 per year, so it must be our price.

Or you tie it into your massive pre-existing ad network and offer a free tier to get money from those who wouldn't shell out for a console. Maybe have a paid tier as well that plugs into your pre-existing premium music and video service.

 

By the sound of it, a mixed model to spread the risk, including 'buying games at full price' in order to play them on Stadia - all that lovely profit gets shared n'es pas?

gamespot.com/articles/how-much-wil...

Also nice custom GPU hardware, apparently running Linux (aka it's a fat Steam box!)

theverge.com/2019/3/19/18272809/go...

 

Yes but you must have the model to sell them, Google has nothing, it doesn't have games either customers or hardware.

But let's check the competitor, or in inverse order.

Sony's stream is as low as $99 per year and Sony is not earning a dime from it, but it established a basement for their or catalog/console and it leaves no space for a competitor.

Microsoft has an all you can eat service (not streaming) for $10 per month. Microsoft earns about $1 per subscription and it is a not a big deal but this service also recommends Xbox Live (an extra $10) and it is when Microsoft start earning. Sony has the same deal, it's streaming service doesn't require PlayStation Plus but it is recommended. So, the total costs are $20, not $10 but it is something that Microsoft and Sony could do.

But, let's back to Sony's deal. Sony doesn't earn money with their streaming service. Accounting speaking it's easy to know that in the balances but let's say that Sony earns $2 per subscription (what is not real). Google could dream to earn the same but, Google doesn't have the hardware, games or even the image.. Google has the infrastructure but that's it.

People hate Epic Games, it is a douche of a company that it's playing hard against Steam, but its strategy is working. What is its strategy? Exclusive deals.

Google even lacks of games, Sony and Microsoft have a robust catalog of games and they deal with other distributors.

Instead, it is in the arsenal of Google:

  • Ubisoft deal (not exclusive).
  • Maybe Doom Eternal (again, not exclusive).
  • And... that's it!.

https://media.tenor.com/images/b11b29c7ad44542e326f0013bddc10be/tenor.gif

Hardware.

GPU-servers are nothing new, in fact it is a big market (mainly for render-farms but also for multimedia service) but it is insanely expensive. A single GPU could eats the same energy than a whole server rack but also it's budget.

But let's say Google buys Nvidia (Google is going with AMD but it is the same price). Nvidia P100 is highly popular, the performance is par with the Nvidia 1080 ti.

Its price (heavily discounted and in bulk) is $3000 (GPU only). A streaming service requires at least once per 3 customers and if we consider the life of the server 3 years then:

$3000/ (12 months x 3 years) = $83 per month to serve 3 customers paying $10 each one ($30 per month). Of course, it doesn't match (and it is only the GPU).

AMD is way cheaper. In bulk, it is possible to obtain and proper AMD Vega (server ready) for $500 but it doesn't give the same punch than a 1080 ti, so it needs at least 1 per customer (plus the whole server & electric bill).

$500 / 12 months x 3 years = $13.8 per month to serve 1 customer paying $10 each one.

Maybe Google could obtain an insanely best price and get it for half the price. But it is not even enough because this number is only for the GPU.

Sony and Microsoft could move it's business (in fact no, they are not generating profit) because they don't sell a PC experience but a console experience, and they could use all the unsold-stock as a server.

Extra sales

Google indeed could sell extra stuff (DLC and whatnot) but again, Google has nothing to sell and companies profit when they sell their own stuff and not somebody else product (Ubisoft in this case).

Price

But let's say that Google starts with $30, so it's selling a service for x3 the price (in fact MS and Sony are charging $20, not $10 but it is something that Google couldn't offer) of the competitors and it's giving less. Nice.

Conclusion:

Google = monkeys - bananas.

 

Or you could make it more expensive than the competitor, but make that price difference worth it. And I absolutely believe that Stadia is much more than a console, with features like direct streaming to YouTube. Besides, I doubt you’ll find any services under $10 a month ($120 a year).

Also, your model doesn’t work for a service that’s probably gonna have millions of subscribers from a multi-billion dollar company.