Next Gen Gaming: How Amazon, Apple, Google, Microsoft, Nintendo and Sony Stack Up – Premium

Unlike the previous generation console wars between companies like Microsoft, Sony, Nintendo, and previously Sega, the next generation battlefields is going to look a lot different than yesterday. This isn’t unexpected as we have now heard about Stadia, xCloud, and there is good reason to believe that Amazon is building a streaming service and Sony, clearly has something up their sleeve too.

In this post, I hope to breakdown the strengths and weakness of each vendor as they prepare to begin selling good and services targeted at gamers for the next generation. While this is not a perfect deep-dive analysis, it combines known information as well as insider content to help paint the best available picture until every company has fully unveiled their streaming services.

Companies that are competing in this segment include Amazon, Apple, Google, Microsoft, Sony, and Nintendo. For this exercise, I will be using these companies and comparing them across cloud technology, fanbase, Intellectual property, online services, and hardware. For scoring, I have used A, B, C, and D; A being the best and D being the lowest mark.

The goal is not to pick a platform and assign a platform as the ‘one to beat’ but highlight the challenges each service has going forward. And let’s be clear, there are multiple new players in this market which means that missing on one key element, could be a significant setback for a service.

Amazon:

Amazon may be the most interesting company entering the gaming segment. The company has a massive cloud infrastructure established, has already proven that it can sustain a gaming community with Twitch, and has the cash to make big purchases when the need arises.

For cloud technology, Amazon gets an easy A; they have the back end services in-place in production today to support a global gaming community. AWS (Amazon Web Service) is the leader in the commercial cloud segment and Amazon has done an excellent job at making it the platform of choice for most gaming companies and Twitch runs flawlessly on it as well.

But on the fan-base, this one is a bit tricky. While a lot of people watch other players game on Twitch, Twitch itself isn’t filled with casual gamers simply looking to have a good time: Twitch is the place you go to try and build a gaming career and following.

For Amazon, it’s an excellent service for top-tier gamers but for average joes, Twitch isn’t something you play, it’s something you watch. If Amazon can turn Twitch into a networked and connective platform, it could be the home run it needs as it has the gamers but they aren’t yet gaming on Amazon’s hardware. For this, I give Amazon a C as it has the makings of a great community but it needs to take the next stop and helping gamers connect to play together outside of streaming without leaving the Amazon portfolio of services.

The biggest challenge for Amazon is not being in control of the IP – the company doesn’t have any lucrative titles that will entice players to only play on its platform. Yes, they are investing in bringing that type of content to its services but one or two titles may not be enough; creating a blockbuster title is not an easy thing to do. For this, Amazon receives a D for its first party IP when compared to other platforms.

But on the other side, Amazon receives a B for its services. Twitch has been one of the company’s best acquisitions and there is no question that it is the most popular game streaming platform available today. Then again, Amazon doesn’t have any local dedicated gaming hardware, which means that it receives a D in this category as it simply doesn’t provide an offering that other competitive solutions provide to complete their gaming portfolio.

Amazon has the gaming eyeballs with Twitch and technology infrastructure with AWS to make something magical in this space, but the company has yet to demonstrate that they will move aggressively beyond this current setup. Considering the explosive growth we have seen in gaming markets with eSports, I do expect Amazon to bring more functionality to its platforms but it may have trouble expanding beyond being the “ESPN” of eSports.

Google:

Google is the latest company to go ‘all-in’ on Gaming with the announcement this month with its Stadia streaming service. While we knew it was coming, Google does have a few unique assets that set them up for success if they are able to overcome their other weaknesses.

When it come to cloud technology, I give Google a B rating. While they do have a robust cloud infrastructure, it is not nearly as complete as Amazon’s or Microsoft’s at this time. If Google’s service is to fail, I don’t see it being because they lacked the infrastructure to deliver Stadia, it will likely be other factors as to why they were pushed out of the market.

The two biggest challenges Google will face when trying to crack into the gaming world will be building up a fanbase and IP. You could argue that Android and YouTube will give it a fanbase from day one, but I don’t think it’s quite that easy. Just because someone is a fan of the Android does not mean that they will be a fan of Stadia; YouTube has a very broad demographic but that doesn’t mean those individuals are loyal fans to Stadia either.

And of course, Google is working on building out its own unique IP to attract fans to the platform but right now, they are far behind in both fanbase and IP which is why I give both categories a D.

But Google does have a lot going for it, starting from behind is not easy but Microsoft did it with the Xbox many years ago. It’s not impossible but requires determination and a lot of cash. On the services side, Google does have a big advantage as their integration with YouTube as that will create a massive sales-funnel to push people towards its gaming platform; watch a gameplay trailer and play it in your browser in five seconds is a damn good pitch.

The YouTube integration will be the ace up Google’s sleeve to help grow its service but what we don’t see yet is a complete online solution that makes it easy to play with friends online. Because of this, I rank Google’s online services a B. And even though the company will not be releasing a home console, the controller they will release connects directly to WiFi to reduce latency; for hardware, Google gets a solid C.

Microsoft:

Microsoft is the first of the ‘classic three’ who are competing in the gaming segment for the next generation. These companies are already established in this market but that doesn’t mean they can become lazy as both Google and Amazon have enough assets in their corners that if given an opportunity, they have the ability to steal market share for the next generation.

On the cloud technology side, Microsoft ties Amazon with an A. The company’s Azure service has the most data centers around the globe and the company is a powerhouse in the enterprise-compute category. With Microsoft, there is one thing for certain, their cloud will not be the weakness of the next generation console or streaming platforms.

When it comes to fanbase, Microsoft has done a good job at building up a loyal community with around 64 million customers using Xbox Live in some capacity. But it’s important to note that Sony has a larger and more loyal fan-base which is why I rank Microsoft, in this category, as a B.

Unlike Amazon and Google, Microsoft has done an excellent job building out legacy IP and is working to bring new games to market as well. The company has acquired several gaming studios recently and also has properties like Forza, Gears of War, and Halo, that are only available on its platform. While the company has had a few misses, with Crackdown 3 or Sunset Overdrive, the company is still in great shape and when it comes to IP, Microsoft earns a B.

Where Microsoft does excel though is with services. Xbox Live is the best online platform for gamers and GamePass also makes it easy to play hundreds of games for a low upfront price. As of right now, Microsoft stands alone when it comes to services and easily earns an A.

And on the hardware side, even though Sony has outsold the Xbox One, I believe that Microsoft has a comparable device as the company has found a way to build a more powerful console while making it fully backward compatibility. But, you can’t ignore Sony’s success either, both Microsoft and Sony earn an A for local hardware.

Sony:

Sony is an old dog in the new world of gaming. The company has remained at the top of the leaderboard for the past couple of generations and for the most part, they have made only a handful of mistakes during that time. If nothing else, the company understands what sells consoles and sets the benchmark for landing the exclusive IP at a consistent rate.

When it comes to technology though, Sony will find itself coming from behind when compared to Google, Amazon, and Microsoft as those companies all have a cloud platform. This means that if Sony wants to compete at this scale, they either have to build out their own infrastructure which is expensive or lease it from their competitors.

Sony has the cash to choose either option but I suspect they will go with leasing as building out a data center takes a significant amount of time and if they haven’t been quietly doing this for a decade, then they will be far behind the other platforms when it comes to game streaming. Further, if Google, Amazon, or Microsoft’s game services fail, they can easily repurpose the data center assets for other operations inside the company whereas Sony may struggle to do this. For this, I rate Sony’s cloud technology at a C.

For the fanbase, it’s clear that Sony has a significant lead over nearly every other platform as the loyalty it has established each year is the envy of nearly all the other players. The only exception may be Nintendo but clearly, there are more loyal fans to Sony than Xbox; without hesitation, Sony earns an A in this category. And on the IP side of the coin, Sony earns a solid A as the company has locked up top tier titles and keeps fans coming back for more as they showed that no matter how powerful the console is, it means nothing if you don’t have the games consumers want to play.

On the services side, Sony’s online functionality works but it is not the best-in-class. Xbox Live still reigns supreme but Sony has caught up significantly in recent years with its functionality. And the company’s PlayStation Now service offers a look back at the games of yesterday and is also helping to position for a solid fight for the future as well. Sony earns an A grade for its services as it has found a way to offer additional functionality to it’s aging console lineup and is remaining competitive against Microsoft’s online services.

And it’s not a surprise as I mentioned it before, but Sony earns an A for its local hardware as it is the clear industry leader in terms of units sold for the current generation.

With the arms race for having the most powerful console likely behind us, the next generation is set up well for Sony if the only thing that matters is a local console. But, we know that cloud streaming services are going to be a big part of the future equation which means Sony may not be sitting as comfortable in a few years if they haven’t figured out how they are going to work around these challenges.

Nintendo:

Nintendo may be the quiet underdog for the next generation of gaming as the company has done an excellent job of carving out its own niche. It doesn’t compete for high-end graphics or robust multiplayer scenarios but instead, it continues to use its deep set of first-party IP to sell its hardware.

In terms of cloud technology though, Nintendo is at the bottom of the pack. Its online services fall way behind Sony and Microsoft and it doesn’t have a ‘cloud’ of its own. Nintendo needs serious help and we may be seeing signs of hope with CupHead on the Switch now supporting Xbox Live, because of this, Nintendo earns the score of D for its cloud technology.

Technology be damned though, Nintendo has a loyal fanbase that keeps coming back for new installments of Mario, Smash, and Zelda titles by the millions. The company may not always have the highest pixel counts but their game-play is always unique which turns into easy sales every generation. Nintendo earns an A for both Fanbase and IP because the two are closely linked together on this platform and the formula has been working for decades for the company.

But along with the technology back-end, the front end services for Nintendo are weak and it’s no surprise that it’s likely the worst in the industry when compared to other platforms. Nintendo has a lot of work to do here which is why they get a D for their online services.

Hardware can be a big hit or miss with Nintendo. The Wii and Switch were a home run, the Wii U, not so much; Nintendo 64 also defined an entire generation of gaming as well. That being said, Nintendo is at a high point for hardware in 2019 which earns them a B. Their handheld console is great but they lack proper high-end gaming but that’s ok; Nintendo has found its place in the market and is performing quite well in its segment.

Going forward, they will likely need to find a partner to help with game streaming if that truly is the future of gaming because up to this point, Nintendo has failed to make a dent in the online gaming space.

Apple:

Apple is a new and intriguing player in this segment, mostly because many don’t consider them a serious threat to companies like Sony or Microsoft for high-end gaming. That being said, they absolutely do compete with Nintendo for the casual gaming crowd and considering Apple has hundreds of billions of dollars in the bank, you can’t ignore them.

But they do have a long way to go to be taken seriously by anyone other than a casual gamer. It’s clear that Apple understands how to scale out services as they have done with iTunes and its App stores but they don’t fully own a cloud to the same level as Amazon or Microsoft. iCloud is a mixture of first and third party providers but it also wasn’t explicitly designed for streaming high-end games. For this, Apple gets a B as they have room for improvement, if they decide to invest in the space, but they do understand how to build, scale, and provide widescale cloud services.

The fanbase for Apple is an interesting thought too. They have extreme loyalty to their hardware and sell millions of phones and tablets each quarter but will this translate into customers buying into the new gaming service announced this month called Apple Arcade? Boasting more than 100 games at launch (coming later this year), for the casual gamer, this could be a lucrative option that keeps you gaming on your Apple devices without having to pay for additional expensive hardware (Switch, Xbox, or PlayStation).

Apple earns a B for its fanbase only because we don’t know yet how likely they are to jump into Apple’s dedicated gaming service. We know the fans are loyal to the hardware but we are not so sure yet about the Arcade service. And on the IP front, Apple doesn’t have a stake in any serious mobile IP brands yet which means the majority of its content will be from third-parties. All this means is that the company may not have many exclusive to the iPhone which puts the company in a similar place as Google’s Stadia. Apple earns a C for IP but if Apple Arcade shows any signs of early life, you can bet that the company will invest heavily into this space to help differentiate its offering.

And for online services, Apple is missing some pieces of the puzzle to make it easier to play with friends on your device. They do have Game Center but for now, it has mostly been an ‘annoying thing you turn off’ rather than something that adds value to gaming on iOS. Apple has done a good job at making games work across multiple devices and making it easier to pick up where you left off, this functionality should shine in the new Arcade service. Apple earns a C for services, only because they have made the process of gaming easier for discoverability and playing, but marked down for the lack of functionality to make it easier to play with friends and proving that they can handle competitive gaming at scale.

But on the hardware side, it’s easy to argue both sides of the equation. On one hand, iPhones and iPads are everywhere but on the other side, they are not ideal gaming devices as you have to use the display for input. For hardware, I gave it a grade of B but this is mixed by even my own opinion as Apple could easily make a peripheral for their phones and tablets and to turn these devices into excellent controllers. And that being said, millions of casual gamers already use these devices every day and Apple sells millions of games through its app store.

While I don’t see Apple’s service being a direct competitor to Microsoft and Sony, I do think that Nintendo should be keeping a close eye on Apple Arcade. Sure, it’s missing Nintendo’s unique IP, although there are some Mario games in the App store, Apple has the ability to cannibalize a large section of the casual gamer crowd which Nintendo also hopes to win as well.

Wrapping it Up:

The intent of this post is to help understand where and how each player fits into the next generation of gaming. From consoles to streaming to mobile devices, where and how gaming occurs is diversifying. And with more options to find new games, it’s an excellent time to be a gamer.

The chart above is not intended to be the bible of gaming strategies, it’s a high-level look at where I think each company stands, in comparison to others, in each segment. I’m sure some will agree with this and others will think differently, the important thing to understand is that the landscape of the gaming community is about to dramatically change.

The biggest unknown going forward is how important is game streaming to the next generation of gaming. If it turns out to be a huge part of the equation, Microsoft, Google and possibly Amazon are set up well for success. But if the market remains like it is today, where local hardware is king, Sony, Microsoft, and Nintendo should remain stable in their positions.