Google Gaming – The wrong tree.

RFM AvatarSmall

 

 

 

 

 

A Google console is a bad idea.

  • With the launch of the Ouya Android console, the blogs are also alive with the notion that Google is also working on an Android based console.
  • It makes total sense for Google to pursue gaming but a console device is not the right way to do it.
  • When I look at Digital Life , Google has superb coverage.
  • Not only is there an app. for almost every activity I could ever want to do online or on a smartphone, almost all are of excellent quality.
  • The exception is gaming.
  • US users spend 32% of their time on their smartphones playing games and at the moment, Google has nothing with which to address that segment.
  • Being a games publisher or hardware maker is not the way to address this segment.
  • Google needs to be the network through which multiplayer games are played and gamers talk and socialise.
  • This is how one learns about one’s gamers and how one can monetise them through targeted advertising.
  • This is what Google is missing to complete its coverage of Digital Life on mobile (and in the fixed internet) and a console is not going to do it.
  • Gaming has become very polarised with the high-end console games at one end and the phone and tablet based games at the other.
  • This is why the Nintendo Wii U is dying and an Android based console from Google is likely to fare little better.
  • These days, there is far more to a console than just games and having a box under the TV is an opportunity to deliver many other services to the user.
  • Top of the list here is TV but without the co-operation of the broadcast industry this will go nowhere.
  • Even the highly specified Xbox One can only manage an HDMI pass through for integrating TV where the user still has to effect almost all TV related functions on the set-top box from the broadcaster.
  • This is because the broadcasters know that their days are numbered and they will try and hang on for as long as they can (see here).
  • This is one of the reasons that Google TV failed in the first place and I see no real reason for Google to repeat the mistake by launching a console.
  • Hence if Google is going to go into gaming, it should be through the creation or acquisition of a network through which games can be played online and users can socialise.
  • This is something that Google badly needs to complete its offering of Digital Life and hence I expect it to do something sooner rather than later.
  • However, the launch of a console is likely to result in the spilling of more red ink and the derision of the broadcast TV industry.

 

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.