Tech Giants Plan Videogame Showdown in the Cloud This Fall

Tech Giants Plan Videogame Showdown in the Cloud This Fall

A big showdown is coming to the video-game industry this fall as two tech giants go head to head.

Microsoft (MSFT), the world’s only trillion-dollar company, just said at the E3 convention that it will launch a preview version of its new xCloud service in October. That’s slightly before Alphabet (GOOGL) rolls out its own cloud-based gaming service called Stadia.

GOOGL, which made its announcement just last week, is the fourth-biggest firm by market capitalization.

Their new rivalry is the latest example of how cloud-computing is remaking wide swathes of technology and ordinary life. The competing services will run video games on cloud servers instead of traditional consoles. That will let users play on a variety of devices — especially smart phones. It will also help fuel the rapidly growing field of esports, with millions of spectators watching the big contests.

One-year chart comparing MSFT with key video-game companies.
One-year chart comparing MSFT with key video-game companies.

Winners & Losers

Advanced Micro Devices (AMD) has already emerged as an early winner in the cloud-based model. It’s up almost 50 percent since GOOGL indicated its chips will power Stadia. Yesterday, MSFT said the same thing.

Traditional video game companies haven’t benefited — at least not yet. A lack of exciting new titles and competition weighed on Electronic Arts (EA), Activision Blizzard (ATVI) and Take-Two Interactive (TTWO) in late 2018. Many analysts expect them to benefit from licensing new games in the new cloud-based ecosystems down the road.

MSFT may have also thrown a surprise into the mix by announcing a new super-powered version of its Xbox will be available by the holidays. It looks like the timing is after the xCloud launch. That way it gets the initial publicity with the streaming service before Stadia. Then its flashy cloud-capable console will come just in time for Santa. Watch out, Sundar Pichai. Satya Nadella isn’t playing games!

In conclusion, big changes are coming to video games as the data-center revolution takes hold. This trend will probably only accelerate with the advent of 5G networks in coming years. Hopefully this post helps you anticipate some of the big stories and names to watch.

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