Google is getting into gaming.
The tech giant best known for its search engine and Android operating system for smartphones now seeks to take a stab at revolutionizing the $100+ billion gaming industry currently dominated by incumbents like Microsoft, Sony and Nintendo. As Google seeks to diversify its revenue sources beyond digital ads, gaming presents a massive opportunity for the company.
But Google appears poised to take a different approach when it presents its vision for the "future of gaming" during its Game Developers Conference (GDC) presentation on Tuesday in San Francisco. That likely includes a commercial version of its "Project Stream" service and its rumored "Yeti" gaming console, both of which could realize the ultimate dream of a "Netflix for video games" streaming service.
Right now, if you want to play a hit game, you usually need to spend a few hundred bucks on a console like the PlayStation 4 or Xbox One or a good $1,000 or so on a high-end gaming PC. Then, you either need to go to the store and buy a physical game disc or wait for a large file to download to your console, which can take hours.
Google's streaming service could change that model by letting users stream top games to the devices they already own, like a laptop, smartphone or streaming box connected to a TV.
"Cloud gaming will enable publishers to broaden their reach even further by potentially taping into new audiences on any device and any screen," Forrester vice president and principal analyst Thomas Husson told CNBC. "Beyond music or video, gaming represents another opportunity to offer recurring streaming revenues for companies in the gaming ecosystem. For cloud platforms like Amazon, Google or Microsoft, it will also become an opportunity to offer cloud storage and services to game publishers, who spend more and more in their IT infrastructure."
Google's vision is to let people stream games wherever they are, on a phone or a computer or a tablet, without the need for anything more than a zippy internet connection.
Google has already shown how this works on a small scale with Project Stream, a trial that let people stream "Assassin's Creed Odyssey" with nothing more than a Chrome web browser running on a cheap computer, like a Chromebook.
Traditionally, gamers needed to own a gaming PC, a PlayStation 4, an Xbox One or a Nintendo Switch to play that game. But Google proved it was possible to do all the hard rendering in the cloud instead of locally on an expensive machine.
While there's already an understanding of how Project Stream worked, there are still lots of questions around how Google's rumored "Yeti" console will operate. Since the processing is expected to occur remotely in the cloud, Yeti may be a simple piece of hardware — perhaps just a controller and streaming box that connects to your TV — that lets users stream games instead of playing them locally on traditional gaming console.
Google declined to comment.
Google has a chance to completely upend the video game industry, which IDC analyst Lewis Ward told CNBC generated $136 billion in revenues in 2018 and is growing at a rate of 15 percent per year. If Google pulls this off, it could mean a lot of additional revenue for the company, and might mean a loss of business for the kings of the console market, Microsoft and Sony.
But there are plenty of things standing in the way.
Google doesn't have a unique vision for streaming games.
Several companies have tried or are still trying to launch similar game-streaming services, but so far all have failed to reach a massive scale.
"There have been several companies that have jumped into this space over the years from a variety of angles, but as far as I can tell, the only one left standing that's got a significant paying subscriber base in Western markets at least, is Sony's PlayStation Now service," IDC's Ward said.
Sony's PlayStation Now costs $99 per year or $19.99 per month. It lets gamers stream more than 750 PS4, PS3 and PS2 games to a PS4 or a PC. This might be the closest competition to what Google is planning, but it still requires specialized hardware. You can't stream to any phone, tablet or other device of your choice.
NVIDIA also offers a similar service called GeForce Now that works on Macs, PCs and NVIDIA's own Android-based Shield console for TVs. The service includes a library of 400 games, which normally require beefy graphics cards and expensive gaming rigs to play. But GeForce Now is limited in scope and is still considered a beta product.
Finally, a start-up called OnLive that launched several years ago promised to let people stream games to any device, but ultimately failed to gain enough subscribers to stay in business. The company shut down in 2015 and sold its remaining business assets to Sony.
Google may be next in line to fail.
"I believe Google will have a tremendously hard time pulling off a successful paid game streaming service," Patrick Moorhead, president and principal analyst at Moor Insights & Strategy told CNBC. "It has middling success with paid music, movies and books, so my expectations are low."
But Husson said Google at least has a good foundation in place.
"It is no surprise to see Google invest in the space," Husson said. "The fact they recently announced the recruitment of Jade Raymond, [formerly of] Ubisoft and EA, is a clear sign they want attract gaming publishers. They already have a massive developer ecosystem thanks to the success of games on the Android platform. Now is the time to signal to the market they too are serious are about cloud gaming."
Google needs a lot of things to work in its favor in order to find success in this industry.
First, customers will need a reliable and fast internet connection to stream games. NVIDIA's GeForce service, for example, recommends a speed of 50MBps for full HD quality, though gamers can play at lower resolutions if they have a slower connection.
In Google's case, its gaming cloud service will need to make sure it's able to serve up those games fast enough, too. Nobody wants to play a game that doesn't immediately respond to commands from a controller.
Google will also need to make sure that it can offer a compelling library of games, something Sony, Microsoft and Nintendo have already proved to their customers. Google isn't a game publisher, so it doesn't have marquee titles or franchises like Nintendo's Super Mario, Sony's "God of War" or Microsoft's "Halo," all of which attract buyers to consoles. But Google can partner with third-party companies like Rockstar for "Grand Theft Auto" or Bethesda for games like "Skyrim."
"They have no in-house content," IDC's Ward said. "They've probably nailed the tech aspects, but without some unique content – which is generally quite expensive and takes years to make when it's AAA quality – it's just another digital store."
Last year, Google hired Phil Harrison, a member of Sony's PlayStation team who served as Sony's executive vice president of development in Europe. That means Google has someone who can put a foundation in place to get developers to build for its platform. Google could make it even easier on those developers by creating a way to port existing titles, built originally for Xbox or PlayStation, over to Google's system. This would alleviate the need to rebuild the games from scratch.
"Google has somewhere between a little and zero exclusive content today," Ward said. "I don't see how they get very far without making massive studio investments, and without making massive gamer community investments, and both are out of the company's wheelhouse."
Meanwhile, Microsoft and Amazon are also going to present stiff competition.
Google's biggest headwinds may come from Microsoft and Amazon, which are said to be working on similar streaming game services.
Microsoft already has a sprawling cloud business — a key component to streaming games — a die-hard gaming fan base, established relationships with publishers and game developers and years of experience building and selling both games and consoles. It's already starting to demo its own streaming game service too.
Just last week, Microsoft provided an update on its own streaming game platform, called xCloud, which may provide a similar experience to what Google will offer. As an already-established player with more than a decade selling gaming consoles and a sprawling Azure cloud business, Microsoft will be a tough foe for Google.
Moorhead said Microsoft has a better shot than Google.
"I'd favor Microsoft's chances given it too has the scale and technology but has been successfully engaged in the gaming industry via Windows and XBox for over 30 years," he said.
Like Google and Microsoft, Amazon also has a powerful enough cloud to run these sort of games.
After all, companies like Netflix are able to stream 4K HDR video to millions of viewers running off of Amazon AWS, and you need that kind of power to stream games. Reports from The Information and The Verge have said that Amazon is building a cloud gaming service. It could eventually run games developed by its in-house game studio, such as "New World," which is currently limited to PCs.
There's a lot more at stake than just revealing a service. And even if it does, there's skepticism that this can make Google a lot of money soon.
"I think we'll have to wait until 2021 before cloud-streamed game services make an appreciable dent in the overall video game industry from a gamer spending perspective," IDC's Ward said.
Husson said this is just a taste of what's to come, and that it'll take a few years for anything to get off the ground.
"The battle is just starting and it will take several years all the more you need an excellent internet and data connection to truly make the most of game streaming. That's why 5G will help in the years to come," he said.