Google has finally announced its much-anticipated new game streaming service, Stadia, but it failed to say how it will make revenue because it will not make money from ads.
While the tech giant has built its empire on ads, Stadia will have to find another way to make money. Analysts say that an ad-centric business model might not sustain Google's ambitious gaming project.
Ad-Based Model For Google Stadia
Principal Analyst Patrick Moorhead of Moor Insights and Strategy said that an ad-based business model is ideal for Google given its expertise in making money from ads. With Stadia, however, it is highly unlikely that Google will opt for the ad-based model.
"In a perfect world for Google, it would be an ad-based model as the company isn't that successful in 'for-pay' services," said Moorhead.
However, he believes that the company's expertise in the ad-centric business model could be replicated into the world of gaming, at least, not in a shorter period of time.
"The reality is that it would take decades to get the gameplay and content optimized for that model," Moorhead said.
Some observers speculate that Stadia will make consumers pay to play, which is very new for the company that has mastered the free and ad-based business over the years. However, Jack Buser, Stadia's Business Development head, declined to give any details on how the gaming service would be offered to their customers.
"We're not speaking yet about the business side of things," he said.
What Analysts Say
Business analysts believe that the ad-based business model is fundamental to Google and it has no expertise in payment-based consumer service. Thus, if Google plans to charge its consumers to access Stadia's services, it will have to make major decisions.
For instance, Google tried to launch a YouTube Premium to compete with Netflix and Amazon Prime. However, in less than one year, it struggled to maintain its services.
According to some business analysts, Google Stadia will definitely adopt a hybrid business model, combining a paid subscription model with the ad-business model wherein Google is an expert. The company has a clear advantage in the ad-based model versus its competitors.
