Google isn’t often associated with the word failure. Founded in 1998 with an initial investment of $100k, it is now the fourth largest company in the world with a market cap of over $1.5 trillion. Its very name became a ubiquitous verb meaning to seek out information. By every standard imaginable, Google is a success.
However, the road to success for any business or startup is often fraught with failures along the way. New ideas, products, or innovations – no matter how revolutionary or game-changing – may not always find an audience or consumer. Google is no exception to this rule. Over the last few decades, it has spent billions of dollars on hundreds of failed services and products.
Google understands this well and has built its success on learning from its mistakes, largely because it can afford to. So then, what lessons can be learned from Google’s latest failure, Stadia?
Stadia: Google’s Foray into the Gaming Market
Stadia is a cloud-gaming service and game development studio launched by Google in 2019. It was supposed to revolutionize video game streaming in the same way that Netflix revolutionized streaming movies and TV. Stadia allows anyone with a device capable of running Chrome and an internet connection to stream and play virtually any video game. No longer did one need an expensive gaming PC or a gaming console like an Xbox or PlayStation.
But Stadia struggled from the start, repeatedly failing to meet target user counts. In early 2021, Google shut down the game development portion of Stadia. Instead, Google would shift focus to publishing games by third parties. A shift that also changed Stadia’s target consumers from gamers to other game developers. But the shift in focus was in vain, and in late 2022, Google announced the full abandonment of Stadia effective January 2023.
Lesson 1: Commit
The video game industry will make a staggering $220 billion in revenue this year alone, more than film and TV combined. And video game revenue is expected to nearly triple by 2030. It’s no wonder Google wanted a share of the pie.
Google’s initial hope with Stadia’s game studio was that gamers would eventually play Google-created games. But creating quality games takes time, years in most cases. It also takes a lot of money, sometimes hundreds of millions. For example, Elden Ring, one of the more recent major games released, took over 4 years to make at a cost of over $200 million, not including another nearly $150 million in marketing. And it doesn’t even crack the top ten most expensive games in the last decade.
Yet, Google shut down its gaming studio just over a year after it began. This is despite a multi-year commitment to the studio, as reported by former employees. The announcement also came as a surprise considering that an email sent five days prior, by Google Vice-President and project head Phil Harrison, praising the team and generally optimistic for the future.