Google announced today that it is shutting down Stadia Games and Entertainment (SG&E), the umbrella name for its internal development studios.
Creating best-in-class games from the ground up takes many years and significant investment, and the cost is going up exponentially. Given our focus on building on the proven technology of Stadia as well as deepening our business partnerships, we’ve decided that we will not be investing further in bringing exclusive content from our internal development team SG&E, beyond any near-term planned games.
Google does not further specify what they mean by “near-term planned games.” One might infer that Google will be releasing at least one game from SG&E, perhaps later this year, but only Google knows for sure.
In the press release, Google is adamant that they will continue to operate and support Stadia as a platform.
Having games streamed to any screen is the future of this industry, and we’ll continue to invest in Stadia and its underlying platform to provide the best cloud gaming experience for our partners and the gaming community.
It’s hard to imagine that Google was not aware of the operational costs of running a first-party studio before investing. They employ many accountants, it’s fair to assume, and they also hired lifelong veterans of the field who presumably shared their experience. The only reasonable explanation is that Stadia is not performing nearly as well as Google has expected. I’d be surprised if it were profitable at all at this point; in fact, I’m quite certain it’s not. But Google likely did the math and realized that their first-party games would probably not attract the number of players necessary to recoup development costs, nor draw in enough new players that would attach to a more expansive library. I believe that Google is reconsidering the scope of Stadia. I think that, initially, Google had hoped to attract an enormous install base for a service that never ends. There’s no such thing as a Stadia console. It is constantly upgraded, never breaks, and never becomes obsolete. The cloud gaming business is a long game. But, clearly, the trajectory has not curved quite as Google hoped. I do think Google will continue to support Stadia, but in a reduced capacity. I fully expect the service to continue and for new games to release every month. I don’t see them changing their business model of a la carte gaming, nor the Pro subscription option.
SG&E was founded in March of 2019, though the first office, in Montreal, didn’t open until October.
Google also acquired Typhoon Studios, also in Montreal, in late 2019. Typhoon developed only one game before being shut down: Journey to the Savage Planet. The game launched on consoles and Epic almost exactly a year ago. It launched on Steam and, finally, Stadia, on Thursday. It’s free with Stadia Pro for the month of February.
Google also launched a new studio in Playa Vista, California last March. The Playa Vista studio was led by Shannon Studstill, who most recently had served as VP of Product Development at Sony Santa Monica.
Alongside the closure of SG&E, VP and Head of SG&E, Jade Raymond, has left Google. Her experience includes Producer at Electronic Arts and Executive Producer at Ubisoft, before returning to EA to found Motive Studios in 2015, then joining Stadia in late 2018.
SG&E was founded to develop games that would take advantage of the power and unique features of the Stadia service. One of the worst casualties of the shutdown is that games are less likely to have Stadia features integrated, and certainly not developed around, the features or qualities of Stadia.