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What E3 Taught Us About the Future of Cloud Gaming


There were plenty of familiar faces at this year's edition of E3, including gaming titans Microsoft (NASDAQ: MSFT) and Sony (NYSE: SNE) . But not all the big announcements have come from the gaming industry's old guard: Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) made a splash when it revealed new details about its cloud gaming platform, Stadia.

The attention being paid to Google's announcements is indicative of the increasing interest in gaming's likely cloud-based future. The old guard was expected to address cloud gaming, too, and what Microsoft and Sony said (and didn't say) about it is just as important as what Google shared. Here is what we've learned so far at E3.

A man plays video games

Image source: Getty Images

Google's platform will offer third-party subscriptions

Google shared new details about Stadia at E3. We now know the price of a Stadia controller ($69, which doesn't include the price of the Chromecast that puts Stadia games on TV screens) and Google's subscription gaming service ($10 per month). But the most interesting thing that Google revealed in its Stadia presentation was that Google's service will not be the only one on Stadia. Other developers will be releasing subscription services that will be compatible with Google's platform or hardware. It will also be possible to buy individual games, though no pricing details on those have been released yet. As I wrote previously , this suggests that it may be less important to ask which service will be the " Netflix of gaming" than to ask which service might become the " Amazon Channels of gaming."

A fractured cloud future

Hot on the heels of Google's platform-focused announcement, French video game publisher Ubisoft announced that it would be among the companies offering video game streaming on Stadia. Ubisoft's service, UPlay Plus, will work on PCs, too. Like Ubisoft, private company Bethesda used its time at E3 to share plans for a video game streaming service -- Bethesda says their offering "can be used with any streaming platform."

The focus on Amazon, Google, Microsoft, and Sony is understandable, but cloud gaming will clearly be a crowded and diverse marketplace.

The console giants still believe in old-school gaming

Microsoft's xCloud is still very much a part of the company's gaming future, but that future still feels a little bit distant -- Microsoft has shown the press mobile devices playing Xbox games but not much else. xCloud does not appear to be anywhere near as far along in its development as Stadia is.

Microsoft's big E3 reveal was "Project Scarlett," a new video game console that will be the heir to Microsoft's current-gen Xbox One. Though Microsoft went all-digital with a recent mid-gen refresh of the Xbox One , its next-gen console will have a disc drive. The new console boasts eyebrow-raising specs. No word yet on what it will cost (or even on its real name), but it sure doesn't look likely to be available at anything close to Stadia's $69 price point.

Sony, too, is sticking with beefy hardware and a disc drive. Like Microsoft, Sony is working to shore up its cloud gaming offerings (in fact, Sony is working with Microsoft to do that ), but the company clearly thinks that there will still be a big market for traditional game consumption at the time that the next generation of consoles launches.

There's still a lot to learn

We know that Google believes the cloud future of gaming is now, and that Sony and Microsoft believe they still have some time. We also know that there will be plenty of companies competing in the streaming video game marketplace, and that platforms like Stadia may be able to make money in much the way that Apple has through its platform tax. But we don't yet know how all of this will shake out. If Microsoft and Sony can ease their fan bases into streaming and keep them loyal in the process, that will be good news, but if Stadia's platform becomes the go-to place for top third-party publishers, gamers might find the $69 price tag too good to resist.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Stephen Lovely owns shares of Amazon, Apple, and Netflix. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Microsoft, and Netflix. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy .

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This article appears in: Personal Finance , Stocks
Referenced Symbols: GOOGL , MSFT , GOOG , SNE



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