The media are wondering how much Google Stadia cloud gaming service will cost. Wired assumes a price of 10–15 pounds ($ 13–20) as Netflix has. Let us see how realistic this scenario is — especially since we have been working in Playkey for many years in this area and are well aware of all the pricing of the cloud gaming business.
So, from a mathematics point of view, everything is quite simple: there is a cost price of a game slot, there is an understandable percentage for leasing. This is how this model looks like.
- The cost of the game slot: $ 3,000 (GTX 1080 Ti + memory + dedicated cores from the CPU).
- Leasing cost: 15% per annum
- Leasing Period: 3 years
- The cost of “hardware”, taking into account leasing: about $ 104 per month
- Cost of placing a game slot in the data center: $ 60 per month
- Playing time utilization: about 50% (360 hours per month)
- The prime cost of the game hour: $ 0.45
- Total cost: $ 160 per month for one slot (enough for about 10 users)
n.b.: 50% of the game time utilization is a necessary measure for any project in cloud gaming. You can’t sell the night hours of European servers to US users, because they will have too high ping.
With this model, the subscription cost about $15/month allows only to cover the cost of hardware. This will not work to fit in the payroll, or customer acquisition costs, and even more so — no royalties to game publishers. Such a model is possible at the start as a promotional campaign for the project, but it definitely does not look like a healthy business.
Of course, there is an important “but”: this calculation is valid for many, but not for Google. They play by their rules and can create exclusive conditions for themselves: at the cost of hardware for servers, at the cost of their content, or at the price of user acquisition.
Finally, Google could earn not on the cost of playing time at all, but on an advertisement or user data.
Will the games be included in the subscription?
There has never been such a cloud gaming business model, where the top new games are already included in the subscription price. And if Google is able to implement such a model and can make a corresponding agreement with the copyright holders, it will be an absolute innovator.
Do I believe in such a scenario? Of course not. Unlike the movie, game completing can be delayed for weeks and months, and no one will risk releasing a new product “in subscription” earlier than in six months or a year. Therefore, I do not think that the model, even in the long run, will repeat the film gage, when the streaming version release can be delayed for only 2–3 months after the premiere.
The copyright holders logic is simple: they have the expected sales volumes, and they will fight to the last ditch to meet these expectations. In the case of the subscription model, I see the only possibility as a scheme where service pays a fixed (and huge) royalty to the right holder so that he gave the top title to the per-minute lease at the day of launch.
Right holders are well aware that not so many players go through the titles to the end. This can be seen even by achievements on Steam: only about 10–20% of players get “final” achievements. With the per minute rent, this 10 % will be the only ones who will pay the entire cost of the game (or even overpay).
What are the chances of the other cloud gaming pathfinders?
I’m sure that no matter how perfect Google’s solution is, users will always keep a glance at the direction of competitors and their dips. It’s still easier with the situation in Russia: in our market, the IT giants policies like Yandex and Mail.ru will not allow Google to seize the cloud gaming market without any problems. Probably, they will either create their services “from the ground up”, or acquire someone from the current players. And Google will only help them pump knowledge about such an opportunity among the players — playing in the cloud. Besides, cloud games require serious logistics. In Russia, the servers will have to be installed not only in Moscow and St. Petersburg but throughout the whole country. It is easier to get it with a ready-made cloud infrastructure — which, of course, Mail.ru and Yandex already have.
What is the other possible solution? It seems that the owners and publishers will try to rebut Google themselves. And they will either start creating their own cloud-based platforms or use SaaS solutions in order to invite players to play in the cloud on their servers, on their own terms and in the regions they need. And let the SaaS provider ensure the quality of service in such a B2B model. We are also looking in this direction, and have recently presented our B2B project — just aimed at publishers and game developers who would not like to create their own software for cloud games, but who are interested in the SaaS model.