[In this opinion piece, SuperData Research founder Joost van Dreunen takes a look at Google's big Stadia announcement and makes that argument that, despite a strong presentation, important details on the actual product and service remain a mystery.]

We’re opening a restaurant!

It is unclear what cuisine we’ll be serving. There is no menu. We don’t know whether it will a buffet or à la carte. We just hired a chef ten minutes ago.

But, our restaurant will have the best tables and chairs in the food business.

So goes the rhetoric of yesterday’s announcement by Google that it is entering the gaming market with its cloud offering, Stadia.

The sleek high-tech presentation was absolutely perfect and flawless. It also told us exactly nothing about the relevant aspects for content creators or consumers.

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Google’s announcement marks a key milestone in the industry’s history. It is in part because video games have become a mainstream form of entertainment that a non-endemic participant like Google has an opportunity to enter. It also gives us part of a vision of the future in which what we traditionally know about console gaming is starting to evolve. After digitizing gaming software over the last decade, the industry is now starting to digitize its hardware.

Tech firms continue to struggle with the notion that content is king. Particularly when launching a new platform, there must be some kind of reason why consumers buy in. And that reason is a selection of great games. Just ask Sony, Microsoft, and Nintendo.

One thing that was noticeably absent from the announcement was how Google intends to differentiate on content. Porting well-known titles and franchises is an obvious first step, and the integration with YouTube is novel, to be sure. However, to claim a meaningful share of the market, Google will have to acquire exclusive content that will draw consumers to its offering. And that’s precisely the missing component. Just because the console is in the cloud now does not mean that this part of the industry’s economics have changed. 

It is no secret in the industry that the new platform overlords have made life considerably less pleasant for content creators. Historically the relationships between console manufacturers and game publishers has not been perfect but their interests were much more aligned. Today, whether talking to the big publicly-traded publishers or to smaller outfits focused on niche audiences on mobile, they are all tenants to absentee landlords. 

Another important component is pricing. How will a consumer pay for this? And how will a developer make money? Perhaps Google will formulate a tiered service that offers an ad-supported free option and a subscription with some premium features. Or maybe it will pay a studio based on how many minutes people play their games.

Google has to convince the industry that it appropriately values content. But if YouTube is any indicator of how it intends to treat game designers, it will not be good. Will it demonetize a game if its comment section is inappropriate? Will it impose restrictions on the type of games that are going to be part of their offering?

It takes considerably more resources and time to make a game than it does to make a 10-minute video. That means it will be incredibly high risk for any studio to undertake releasing a title that, at the whim of Google’s algorithmic absolutism, stops generating revenue from one moment to the next.

The hopeful utopian perspective here is that as cloud gaming delivers on its promise of facilitating play of any high-quality game on any device, the market will grow. We already see the positive benefits this has had for music and video. And Stadia’s initial leadership team suggests that they are serious: with industry luminaries like Phil Harrison, who held key positions at both Sony (where he oversaw 13 studios, several of which are among Sony’s most successful) and Microsoft, and Jade Raymond, who’s held executive positions at Ubisoft and EA, it suggests that Google may go about cloud gaming differently than it has with other forms of entertainment. 

The dystopian point of view states that content creators will be reduced to a cost-plus line item in a subscription-model that only values them for the increase in subscriber count they provide. 

Because this is very much a ‘tech play’, some of the new platform contenders are the type of firms whose interests do not historically align with those of game makers, especially when compared to incumbents like Nintendo, Microsoft, and Sony. I suspect that there’ll be an abundance of mediocrity as small and medium-sized game companies flood the new platform in the hope of capturing market share. But the big guys will likely wait and watch how this plays out before they expose their carefully crafted IP to the whims of a new platform holder that has no obvious interest in their success. 

But I really want to be wrong about this.

The market opportunity for cloud gaming is clear. But I have reservations around the way Google treats content providers elsewhere, as it does on YouTube. Historically it is not the obvious platform for content creators that spend years and millions to make games. 

Stadia will have to show that it is for real. And when it hosts its grand opening later this year, and patrons line up to fill their bellies, we will get a taste of its culinary acumen. 

But chairs are not food.

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Is cloud gaming here?

No. In the transition to digital, cloud gaming platforms are currently in their scooter-stage: they’re all pretty much indistinguishable to consumers and are looking to differentiate. By heavily investing in content and taking the lead, it is possible that Google establishes itself as one of the leading cloud gaming platforms but during this initial phase content will be the key differentiator.

What is the significance of the tie-in between Ubisoft and Google?

Ubisoft has been among the few top-tiered publishers that is willing to try different platforms. After getting out of a terrible long-term relationship with Vivendi, Ubisoft has been newly single and ever so ready to mingle. It’s been all over the industry dating everyone. So while I don’t doubt their intent or integrity, I also do not believe Ubisoft’s buy-in with Stadia is the swallow that makes spring.

What does this mean for Microsoft and Sony?

At first glance not much. Despite Google’s ominous size, the incumbents have decades-long relationships with top-tiered publishers and developers. Sony has a strong network of studios that can produce high-quality titles, and Microsoft has scale because it can play a role on both PC and console. Google is going to have to compete against their existing relationships.

[This editorial was originally published as part of Joost van Dreunen's regular newsletter on innovation and interactive entertainment. You  can subscribe to the newsletter here.]