Google Is Going To Rule The Gaming World This Decade
Gaming on an Android smartphone may not be the same as using an Xbox 360, and the games on Google Chrome certainly leave a lot to be desired. Google (NASDAQ:GOOG) has been rumored to be going into gaming every couple of months for the last five years. The company has already implanted itself at the center of the gaming experience however, unbeknownst to the most ardent of players out there.
Google has apparently closed its acquisition of Twitch, the video site specializing in video game streaming. The buy, which will cost the Mountain View company about $1 billion, puts YouTube (which is to have Twitch integrated into it) at the forefront of gaming media, and that's the business that Google should be trying to capture. Google has never been about selling software, it's always given it away for free in order to pull eyes into advertising.
Google Stays Away From Hardware
Google is not going to release a video games console any time soon and looking at the performance of Sony and Microsoft in recent years, the company is probably making the right decision. The video games market is going to absolutely explode in the coming years, there's no doubt about it. Which form that explosion will take is, however, much more difficult to predict.
Google isn't going to mess around with games that could fail completely, it's not going to mess around with consoles, which have to make a big loss before they make any money. The company is all about keeping its margins high and staying away from businesses that don't augment its control of the online ad world. Consoles won't do anything for its revenue. Twitch, however, is a perfect compliment.
Google Aims At The Core Of Gaming
Gaming is big business, and Google is going to attack everything that surrounds it rather than selling games itself. The company already controls a huge chunk of games advertising and, with the rise of the Let's Play and other video streaming content, the company's control of that part of the industry is going to head upwards, and Google is the only company making any effort to really harness the energy.
Twitch and YouTube are at the center of the way that gaming is perceived. They are the places that gaming fosters a community and they are the places that advertising dollars are going to flow in the next few years. Given Google's ability to create a space that contains a niche audience, the price of that advertising is likely to be high, and the overhead is likely to be low.
Google is, despite the lack of a Googolplex console, betting big on gaming. Its $1 billion Twitch acquisition proves that. The company is also likely to be one of the biggest beneficiaries of the industry in the year ahead, and it's almost certain that its gaming ads business will generate more in profit than Microsoft (NASDAQ:MSFT) has ever managed from the Xbox division that weighs so heavily on its results.
Disclosure: Author represents that he has no position in any stocks mentioned in this article at the time this article was submitted.