Earlier this week, Google presented Stadia — a streaming service that promises the future of one unified cloud platform for games. Games would be hosted and run right in the cloud, so as long as one has the access to high-speed internet connection (and, probably, an active subscription to the service), a library of video games would be accessible from almost any device, unconstrained by hardware computing limitations. Discovering and launching a game would be as easy as clicking on a YouTube link.
The next era of gaming is streaming
Stadia is a genius move by Google, as it leverages all core competencies, resources and assets Google has. Running a cloud-based streaming service makes all the sense in the world for a cloud-first company. Google already has data centers and infrastructure, and of course it owns YouTube, which is already a key element of video games discovery and engagement, but with Stadia, YouTube will become a storefront, and probably an additional revenue stream for influencers. Of course Google has search game knowledge data accessible through Assistant. This will start a new era for games reach, accessibility, discovery, engagement, advertisement, and marketing.
Microsoft is reportedly working on a similar service which will probably be revealed at E3 in June. Amazon, with vast AWS infrastructure and Twitch, is likely an another contender for the gaming streaming wars throne. SONY already has PlayStation Now, but it remains to be seen if SONY and Nintendo would have infrastructure, resources and ambitions to become the top-class platform holders of the streaming era. In this era, we would be offered to pay for multiple subscription services which would be differentiated primarily through exclusive games — similarly to what is about to happen with video streaming very soon.*
Apple’s services narrative
One company curiously absent from this list is Apple. For Apple, gaming is a huge part of revenue stream for App Store, but the company has been historically not paying much attention to gaming and hasn’t expressed much of their interest towards controlling the medium beyond casual market. But it’s time for Apple to become more hands-on — as the games have become such a dominant force in entertainment and a part of global culture code, it’s hard to believe Apple would not want to own the space similarly to how it now approaches music, video, and news industries.
On Monday, Apple is rumored to unveil the next batch of their content services. Bloomberg reported that in addition to new Apple Video service, revamped Apple News, and some payments offerings, the Cupertino company is also working on a games subscription service that might be unveiled soon. This service, however, apparently is not going to compete with Google, Microsoft and Amazon current and future streaming offerings. It’s interesting to speculate why Apple is not (at least yet) interested in this space.
For many people involved in games and passionate about AAA gaming, including myself, streaming looks like the future. Ability to play from any device, not worrying anymore about software and hardware; access to the entire library of games in the cloud; developers no longer worrying about their games compatible with hundreds of hardware/software combinations; a new era for massively multiplayer gaming, from the technical standpoint; new discovery mechanisms — all of these seem genuinely exciting and game-changing, and can only be enabled by cloud back-end infrastructure. No wonder many tech giants are moving into this space. Being a fan of Apple, and user of Apple devices and services, I would love the Cupertino company to make their move in the space, but will they, or can they?
I believe that the dawn of video games streaming marks the new era of not only entertainment, but computing, which increasingly moves away from Apple’s comfort zone and core competencies. Games is just the beginning, as Google and others are building the future of cloud-based runtime, OS and software, with local hardware becoming just thin shells.
With Apple Music and other media content services, Apple is already challenging itself beyond its traditional comfort zone. A company that has traditionally made most of its money from selling hardware differentiated through proprietary software (OS and apps) is now running cross-platform media services (I have zero doubts upcoming Apple Video will be cross-platform, and Apple News might be as well). Apple is now both a vertical integrated hardware/software company, and a horizontal services company, which in itself is an interesting internal conflict of business models. It would seem logical that an imaginary Apple Games service should also be a cross-platform media service. However, for Apple, games would be an interesting dilemma philosophically.
Apple and games — media content or software?
Games have always been at the intersection of media and software. Music, video and news are pure media content for Apple, something that has no ties to Apple’s hardware and software and is not enabled or leveraged by it. Games is another story. Apple treats games as software, not media, and rightfully so — game apps on all Apple platforms run on Apple’s proprietary hardware and use low-level APIs and technologies like Metal, SceneKit, SpriteKit, and others. For Apple, games is software that differentiates their hardware, and Apple evangelizes using their tech and APIs with third party developers.
And of course, it’s not only games. Apple treats all apps on the App Store similarly, with incentivizing and pushing developers to use proprietary APIs and leverage hardware and software that Apple markets, such as ARKit and CoreML for example. For Apple, this software is what makes their platforms and hardware unique.
By moving this runtime and this tech to the cloud, Apple would cannibalize and undermine the competitive advantage and unique selling points their hardware platforms have. Instead of writing apps that leverage technologies of iOS, macOS and other platforms, developers would write for the cloud, which would make Apple’s consumer hardware less differentiated. Why would one buy an iPhone if a game or an AR app would be available on all platforms through streaming with no apparent differences in how it runs across different hardware?
No wonder then that Apple — at least in the short- to mid-term — is not interested in the cloud runtime, and instead of making a streaming gaming service it will “just” build a paid games subscription bundle for the App Store (according to Bloomberg). That means that Apple still sees games as software, not media, and treats games as differentiation for their hardware/software platforms, not an independent services revenue stream (as opposed to music, video, and news).
After all, a case can be made that all strong contenders for games and software cloud streaming race are moving to the cloud not because they want, but because they have no other choice. Google, Microsoft and Amazon all have various degrees of somewhat limited success in hardware and software control and revenue generation on desktop and mobile. Google has zero presence on desktop gaming, and Android gaming is a highly fragmented and inconsistent experience (with Apple dominating the premium segment, which is particularly important for higher performance gaming). Microsoft is not profiting much from Windows gaming and has faced some struggles with Xbox One. Amazon currently has no first party play with desktop and mobile platforms at all. For all these companies, leveraging their cloud capabilities to undermine hardware-first business models make a lot of sense. Apple, in the meantime, sees lots of success with selling premium hardware and software and is dominating in the high-end segments of desktop, laptop, phone, tablet, TV set-top box, and wearables markets, and sees zero incentive to undermine that by pivoting to cloud runtime.
If you don’t cannibalize yourself, someone else will
And yet, the promise of cloud streaming gaming described in the beginning of this article seems real. Unlike cloud-based productivity apps and services that arguably in many aspects feel inferior to native software experiences, games as a medium would likely benefit tremendously and would become better, not worse, by moving to the cloud (latency and input lag issues aside). If playing massively multiplayer MMOs of unprecedented scale, from any device, with one-tap launch from YouTube or Twitch, integrated with Google Assistant and Alexa — something that apparently can only be achieved through cloud runtime — would become the new norm, what play will Apple have in this new era of entertainment? Will native games on their platforms would be good enough to offer the sustainable long-term alternative to cloud streaming gaming? Will this alternative be good enough for developers to invest resources in writing native games for Apple hardware in addition to cloud streaming services?
Even today, Mac as a gaming platform is not very exciting at best (let alone Mac App Store gaming), and on iOS, fewer and fewer games are exclusive to the platform. Instead, more game developers are using cross-platform game engines and treat availability on as many platforms as possible (and even better, with cross platform play) as a top priority — just look at Fortnite. tvOS as a gaming platform is pretty much a ghost town for many reasons. As time goes by, and especially as the promise of streaming would becomes more and more appealing, writing native apps for Apple’s proprietary hardware and software would become a tougher sell for more and more developers. Yes, Google Stadia and other key streaming services would likely be available on Apple products as well, but will Apple be comfortable with seeing the status of their hardware increasingly relegated to empty shells for somebody else’s content? As Steve Jobs famously said, if you don’t cannibalize yourself, someone else will — so maybe it’s time for Apple to embrace cloud gaming and build their competitor to Google Stadia, if the company wants to control their own future in the next era of gaming. Apple is already trying to do exactly that with music, video, and news.
For now, it seems that Apple treats games as software, not media content. As Apple moves to cross-platform streaming world with media, the real question is, will this philosophy change. If it does, what it would mean for Apple’s approach to native software in general? Games is the new frontier of the next era of computing which confronts decades-old business models and challenges Apple to its core. Apple would need to figure out what their UX and UI-first philosophy would mean and what difference it can make in the cloud-first world.
*Note: I have zero insider knowledge on the matter