In announcing Stadia this March , Google executives sold their streamed-gaming ambitions as a way to revolutionize the gaming business and the community surrounding it. With today's announcement of Stadia's pricing and business model , though, the company seems to be stuck in a decidedly old-fashioned mode that doesn't really exploit streaming's biggest benefits.

It starts with the initial hardware purchase requirements. A big part of Google's sales pitch for Stadia was the fact that the service would work on any computer with a Web browser, as well as generic mobile phones and tablets, using non-proprietary USB controllers. Requiring early adopters to purchase $129 worth of Chromecast Ultra and Stadia Controller hardware cuts against that "open to anyone" messaging. In a world where an Xbox One with a bundled game routinely sells for under $250, asking for a $129 hardware commitment to use Stadia's platform doesn't seem especially revolutionary.

Yes, that "Founder's Edition" purchase requirement (and the attendant $9.99 Pro-tier monthly subscription) will go away sometime in 2020—likely after Google has confirmed its game streaming servers can work at scale. But by then Google will have already lost the initial impact it could have had with a launch to billions of Chrome users. Requiring mobile users to have a Google Pixel 3/3a phone similarly deadens the market impact of Stadia's planned November rollout.

That's a shame, because being able to avoid additional hardware purchases is theoretically one of Stadia's biggest value propositions (assuming the quality of the streaming experience is comparable to local play, of course). The average PS4 user, for instance, has purchased 9.6 games for the system, according to numbers released by Sony in January. Assuming a $40 average price per game and a $350 average purchase price for the console, that means hardware costs amount to roughly half of the average PS4 user's total PlayStation spending.

That could mean a lot more money to spend on games on Stadia, but only if and when the need to purchase proprietary hardware is a thing of the past. Then again, well over 100 million people worldwide already own a high-end game console or PC to play on. For them, Stadia's main value will only come if and when they are faced with the prospect of a hardware upgrade.

Join the buffet line

Perhaps the biggest letdown of the Stadia pricing model, though, is that the games will only be sold à la carte, at prices comparable to those on other platforms (aside from a few Pro-tier freebies, starting with Destiny 2). That's despite Google's Phil Harrison statement in April that "our platform at a fundamental level has been architected to support a very wide variety of what people call 'monetization options.' Everything from purchase to transaction to subscription."

As currently constructed, Stadia ignores one of streaming's main advantages—bundled convenience. One of the best features of streamed entertainment is the ability to simply dive into a new work immediately, without having to think about whether it's worth the marginal cost of an additional purchase (or the incremental time cost of a download/install, a trip to another device, etc.). Google hinted at this convenience multiple times in its March presentation, showing use cases where players might dive into a game immediately by clicking a link on a YouTube video or by sending a friend a link to a precise point in a game.





















What Google left out in that presentation is that most players using those links will usually be confronted with some sort of "purchase game" prompt (and the included, flow-breaking economic decision) before they can get to playing. The only exceptions will be games they've already bought anyway or the games that are already included in their Stadia Pro subscriptions, neither of which is very useful from a game marketing/discovery perspective.

These users will also be "purchasing" games that will only be available for as long as Google decides to support Stadia as a going concern. That's a change even from downloadable games, which often will work as long as the hardware/hard drive they're stored on doesn't give out. And while Google's John Justice assures Ars that "Google is in this for the long-term," Google's history with product shutdowns doesn't exactly breed confidence.

Customers at large seem to prefer streaming platforms that let them avoid these incremental purchase decisions. Look at the TV and movie industries: à la carte "video on demand" purchases and rentals were worth an estimated $1.9 billion in 2017, according to DEG. Streaming services like Netflix and Hulu, on the other hand, amounted to $9.5 billion in revenue that same year.

The same is even more true in music, where streaming services offering access to millions of songs now make up 75% of the entire industry. When it comes to "instant access" digital entertainment, consumers in other fields have shown a clear preference for unlimited subscriptions.

Let’s experiment

One can also look at Sony's experience with PlayStation Now. The service launched in 2014 with an overpriced (and inconvenient) time-limited, pay-per-game rental structure. By early 2015, Sony had learned its lesson and started offering monthly "all-you-can-play" subscriptions instead. Today, Sony boasts of more than 700,000 PlayStation Now subscribers paying $100 a year for full access to a library of more than 750 streaming games.

There are some key differences between Stadia and PlayStation Now, of course. PSNow is overwhelmingly focused on older, "catalog" titles that compete less directly with the new releases that form the bulk of the PS4's à la carte game sales. Stadia's initial lineup, on the other hand, will include many 2018 and 2019 releases that can still theoretically demand premium pricing up front.

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Even so, there are quite a few older games on Stadia that could theoretically be bundled together into some sort of "all you can play" tier of classics. It's not entirely clear how the economics of this would work out, though.

PlayStation Now is sold more as a complement to Sony's existing "discs and downloads" purchases, not a wholesale replacement for it, and serves at least in part as a "loss leader" attracting customers to a Sony console purchase. The service also provides a longer-tail revenue stream for Sony's large library of older first-party titles, which don't cost the company anything to license.

Stadia, on the other hand, is at the mercy of outside publishers for all of its content (for the time being, at least). Google isn't discussing what cut of revenue it's taking from its publishing partners, but it has to be enough to make up for what are no doubt expensive server infrastructure and bandwidth costs. Who knows how much an "all you can play" tier would have to cost under such constraints.

Even absent a buffet-style subscription, though, there are plenty of ways a streaming-only gaming platform can try to innovate. Maybe Google could let users play a 15-minute demo of any game on the service for free. Maybe it could sell cheap "gameplay time" packs that let users sample multiple titles for a few hours without a full purchase. Or Google could take a page from iTunes and GameFly and start a streaming version of a game rental program, either on an à la carte or an "X games per month" basis (HTC's Viveport virtual reality service has been experimenting with this kind of tiered structure).

Not all of these ideas may be economically feasible in the longterm, either on the supply or the demand side. But one of the main arguments in favor of cloud-based streaming games is the ability to overturn existing structures. Stadia's streaming platform has the opportunity to totally change the way games are bought and sold. For now, though, it seems to be mostly stuck in the past.