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(Bloomberg) — Google is getting into gaming in a serious way.
The Alphabet Inc. unit unveiled Tuesday a new game streaming service called Stadia at the Game Developers Conference in San Francisco. The announcement marks a major new foray into the $180 billion industry for the internet giant.
Stadia lets developers build new games on a streaming platform that will allow players to access the action through the web instead of having to buy expensive consoles or personal computers. The company also introduced its own game controller, which creates console-like gaming on a computer or smartphone. Alphabet shares rose less than 1 percent to $1,198.44 at 2:32 p.m. in New York.
Google already has a hefty presence in gaming through its control of the Android app store, which serves as one of the most popular mobile game marketplaces. But the search giant and its other big-tech peers like Amazon.com Inc., Facebook Inc. and Apple Inc. have less of a central role in the lucrative hardcore gaming market, which still runs on high-end hardware like Sony Corp.’s PS4 and Microsoft Corp.’s XBox and has spawned a huge e-sports entertainment industry. With Stadia, Google is aiming to bring more complex games to more people.
“Technology should adapt to people, not the other way around,” Chief Executive Officer Sundar Pichai said at the event. “We are dead serious about making technology accessible for everyone.”
Stadia runs through the company’s YouTube video-streaming platform and takes advantage of Google’s extensive network of data centers and internet cables. While the company didn’t announce a price for the service, it said artificial intelligence technology helped make the product possible. With its presentation, Google drove home the point that its technical tools alone would make the future of gaming services work. It repeatedly mentioned the advantage of its cloud-computing power and YouTube, suggesting the service is designed to bring more users to those units — two areas where investors are looking for sales growth beyond advertising.
Still, Google will need to persuade game publishers to put their content on Stadia if it wants to attract gamers, said Jitendra Waral, senior internet analyst at Bloomberg Intelligence.
“Google’s pitch of leveraging infrastructure and YouTube to enable cloud gaming is a logical extension of their strengths,” Waral said. “The question is, can the content and experience compete with Sony or Microsoft?”
Google may need to acquire in the area “because content will remain the king irrespective of the technology,” he said.
The high-end quality Google claimed in its announcement will only be accessible for people with fast internet connections, he said. “For the infrastructure and consumer to be ready for this movement we will have to wait a couple of years.”
Google also said it’s forming an internal gaming content studio, led by a former executive for gaming company Ubisoft Entertainment SA. Google didn’t say how much it would spend to create its own games.
Stadia could also push up Google’s costs as the company builds out its cloud business and hires thousands to monitor content on YouTube. In addition to buying video games for the service, Google will also have to modify and upgrade some of its data centers to handle the game-specific traffic generated by the new service.
Game developer stocks moved on the announcement. Activision Blizzard Inc. jumped as much as 5.2 percent and Take-Two Interactive Software Inc. gained 3.2 percent. Electronic Arts Inc. fell as much as 2 percent.
The company announced a partnership with chipmaker Advanced Micro Devices Inc. to help power the service. AMD shares gained as much as 9.3 percent on the news.
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