Google’s has built its empire on ads, but analysts say it will have to find another way to make money for its new gaming service Stadia (GOOG, GOOGL)
|03/23/2019||Posted by BusinessMediaguide.Com under General World News||
Ads in games are a $3 billion market today, according to Eric Haggstrom, a forecasting analyst at eMarketer. But most of that revenue is in-game ads for mobile games, which are generally a less refined experience than the high-end games Stadia plans to offer.
Still, Haggstrom thinks having ad space within Stadia games could be a compelling offer for game publishers.
“If you’re a new battle royal game that just came out and you want to get people playing your game, ultimately the best place to advertise would be within other games that are similar,” Haggstrom said.
Haggstrom thinks the Google service is likely to adopt a similar approach to the mega-popular Fortnite, which doesn’t charge players to download its game, but instead allows for in-game purchases of “skins” and other cosmetic items. This type of in-game purchase model could make sense, he believes, given Stadia has been touting an open platform with very few barriers to entry.
Not everyone’s in the dark
For one important group however, Google is being a bit more forthcoming. Google’s Buser said he’s already been sharing Stadia’s revenue model with game developers to help get them on board.
“Some games can take years to make so in order to get a game developer to create for your platform you have to show them that it’s going to be financially viable for them,” Buser said.
Given what’s a stake, Google can’t afford to lose game developers.
If Buser and the Stadia team finally find a way to create a meaningful business outside of advertisements for Google, the ramifications for how that model could be applied elsewhere across the tech giant’s properties could be massive.
- Google wowed the world when it unveiled its new game streaming service, Stadia, on Tuesday, but it failed to address how the service will make money.
- Despite the lack of information around a monetization approach, one thing analysts that we spoke to agree on is that an ads-based model will not be enough to sustain Google’s ambitious gaming project.
- Having to add an alternative revenue stream to ads may be difficult for Google, given its spotty track record with ‘for-pay’ services, but if successful, it could have massive ramifications for the company.