Ben Gilbert/Business Insider
Microsoft showed off its Project xCloud streaming video game service at an event in Los Angeles in mid-June attended by Business Insider.
- Every major tech company, from Apple to Amazon to Google, is trying to create a "Netflix of gaming" service.
- The idea is simple: Stream high-quality games to any device, regardless of how much processing power that device has.
- The potential for such a service is massive, but there are major technical hurdles to overcome - from latency to bandwidth caps to slow internet speeds.
- The CEO in charge of Take-Two Interactive, the publisher of "Grand Theft Auto" and "NBA 2K," spoke to those hurdles and his own skepticism with video game streaming in an interview with Business Insider earlier this month.
- Visit Business Insider's homepage for more stories.
The future of gaming may not involve a high-powered, expensive box sitting underneath your TV. Instead, it could be as simple as Netflix.
Just as Netflix allows you to watch movies and TV shows from any device, a streaming gaming service promises to let you play high-end, blockbuster video games anytime, anyplace and on any device - your phone, or tablet, or laptop, or TV. No game console required.
The vision is often referred to by the shorthand, "The Netflix of gaming."
In 2019, nearly every major tech company is working on a version of such a service - and each hopes to establish itself as the de facto standard in video game streaming services.
Casey Rodgers/Invision/AP
Xbox leader Phil Spencer talks about Project xCloud, Microsoft's Netflix-like game streaming service, during a stage presentation in Los Angeles earlier this month.
And there's a good reason for that: Streaming has the potential to massive increase the number of people able to play high-quality games.
"There are 2 billion people who play video games on the planet today. We're not going to sell 2 billion consoles," Xbox leader Phil Spencer told Business Insider in an interview in June 2018. "Many of those people don't own a television; many have never owned a PC. For many people on the planet, the phone is their compute device," he said.
But there's a difference between a potential market and reality.
"There may be some disappointment that the market increase won't be as large as some people think," Take-Two Interactive CEO Strauss Zelnick told me in an interview earlier this month.
"I don't think it's as simple as there are a couple billion phones out there, and only a couple hundred million consoles out there, so the market will grow by 10 or 20x. I think that's facile," he said.
You may not know the name "Take-Two Interactive," but you've assuredly heard of its games: "Grand Theft Auto," "NBA 2K," and "BioShock" are just a few of the huge franchises Take-Two publishes.
Rockstar Games
"Grand Theft Auto 5," originally released in 2013, is a sales juggernaut. It's one of the best-selling games ever published.
Take-Two's games will be part of various streaming services, starting with Google's Stadia this holiday, and Zelnick is happy to take the business.
"If the market doubled that would be a great thing, if we maintained our market share. And even if the market went up by 20%, we'd take that," he said.
But even that is a big maybe, and Zelnick remains skeptical of the overall streaming market - especially the massive potential audiences being promised when the reality is likely much smaller.
He explained his skepticism of that bombast with a metaphor about a fictitious coathanger startup:
"Typically equations like that don't work out - you read those in like startup venture capital fundraises. 'Our total addressable market' - if only 5% of the people who currently buy coathangers buy our coathanger, our company will have $20 billion dollars in revenue. And the answer is, well, you didn't get 5%. You didn't get .5%. You didn't get. 0005%. In fact no one bought your damn coathangers. So you just don't know until it occurs."
The issues with video game streaming technology are far more complex than standard video streaming.
If you're watching a movie on Netflix and your internet speed drops, the film might drop in resolution or pause for a few moments to catch up ("buffer"). But if you're playing a game over a stream and your internet speed drops, the may become unplayable. You might lose a difficult fight or miss a crucial button press (or whatever else).
Reuters
Google's Stadia promises to bring
Simply speaking, there are massive technological hurdles to overcome - and Zelnick is understandably dubious of modern technology overcoming those obstacles.
"Just make a cell phone call, from here, and walk from here out front," Zelnick said to me. We were sitting in a meeting room within the Los Angeles Convention Center in downtown Los Angeles, in the same complex where the Lakers play.
"See whether you stay connected. And you're in Southern California!" he said. "You're not in the far reaches of some remote area in the US. Or, even more, in India."
Issues like that could be solved - Zelnick said he's "optimistic that over time the quality will be excellent" - but that may not be in the immediate future.
That of course isn't going to stop tech giants like Google and Microsoft from jumping in right now anyway; both companies are moving ahead of with Netflix-style video game streaming services this fall.
