This year has led to releases of several new video gaming streaming services, notably Google’s Stadia and a significant update to Nvidia’s GeForce Now. These services aim to provide value to consumers by streaming video games to any device, freeing up the cost of purchasing hardware, and giving much more freedom as long as high-bandwidth internet is available. To be competitive and maximize revenue, however, companies cannot merely provide a stand-alone service. They have to offer a multi-sided platform or MSP. MSPs are a way to unlock the real growth potential of a product or service by finding new revenue streams or improving the growth of network effects.
Google and Nvidia are hitting brand new territory with these services, but the strategies relating to MSPs are still applicable. There are four main ways to convert a singular service into an MSP:
- Open it to third parties
- Connect consumers
- Offer multiple related solutions
- Target consumer segment of a different product or service
When it comes to targeting a consumer segment of a different product or service, both Google and Nvidia are doing that now. Neither company is aiming to be a big-name video game developer, so they are both aiming to capture the market of video game purchasers. This situation can be great for both video game developers and their existing customers. Still, one of the most significant risks to this type of strategy is making the core producer unhappy. We had seen this happen this year when GeForce Now lost the ability to stream all Activision Blizzard games. Companies must ensure that they produce great relationships with primary sellers. In this case, Google and Nvidia must ensure that they maintain good relations with video game developers. Otherwise, it will be problematic to stream those video games.
When it comes to third parties, Google and Nvidia are taking two different routes. Google is aiming to be as proprietary as possible by only allowing gamers to buy video games on the actual Stadia environment itself. GeForce Now only streams games that users have already purchased on other platforms, which gives Nvidia less control but allows consumers more freedom. Time will tell which strategy is more effective. It is my opinion, however, that gamers are more sensitive when it comes to the ownership of their video games. Steam has gotten around giving full ownership to players by providing a very convenient library system with additional features such as achievements, friends, and discounts. Stadia is attempting to maintain full ownership without any of those options fully developed. I believe that Stadia will have to either change their ownership model or face less than stellar subscription numbers. Today Google announced a free subscription model, which seems to reinforce that Stadia is not doing well.
When it comes to connecting consumers, or offering multiple related solutions, Google and Nvidia haven’t done anything extraordinary. However, these options provide great opportunities. Connecting gamers in ways that add value can make the platform more appealing. For example, Google or Nvidia can integrate with Twitch or YouTube Gaming. If the servers are already streaming to the gamer, why not also stream to Twitch or YouTube at the same time? This is something that many players already spend money and time figuring out how to do. In regards to offering multiple related solutions, perhaps discounts on snacks/drinks, in-game collectibles, or even deals on ISP providers can be made available to customers.
There are numerous risks to pursuing the MSP path, but historically platforms are shown to be much more revenue-generating than stand-alone services. It will be interesting to see which company becomes dominant in this new space.
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