Will xCloud and Caffeine.tv be game changers?
Winners and losers in the escalating streaming wars.
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As Big Media and Big Tech meet each other in the streaming arena, it begs the question who is more likely to emerge the victor. Microsoft has recently launched the beta on its xCloud gaming service, and Fox invested $100 million in Caffeine.tv.
Thanks TechCrunch for the image.
Microsoft’s xCloud promises to deliver on what I think is the holy grail of cloud gaming: delivering console-quality gaming that is platform agnostic. What we’ve seen so far is a lot of PC gaming services that involve a lot of extra steps. We haven’t seen the ultimate (and arguably only) form that matters: console-quality games that can be played around the world on mobile devices.
Project xCloud is a tactical response to Google’s looming Stadia release. To not have Google dictate the narrative and set consumer expectations around cloud gaming, it is critically important that Microsoft keeps pushing.
For us mortals, it is a great benefit to have an eager and well-funded tech firm trying to muscle its way into this category. It puts everyone on notice and makes them, quite possibly, try a little harder.
It’s easy to dismiss the Microsoft’s foray as a reaction to Google’s imminent release in November. But team Redmond has been working on this for years. When Phil Spencer, Microsoft’s executive vice president of gaming, started reporting directly to CEO Satya Nadella, the company showed how serious it was about gaming as a cornerstone of its long-term strategy.
There are some key questions here: once the tech kinks have been worked out, what type of offering can audiences expect? Whenever I log into my cloud service, will I find a HBO-type experience (high-end content with superstar creatives, OMG Big Little Lies, #swoon) or a Netflix-type experience (“I bet you I can find something in here to keep me entertained right now”)?
As for Caffeine.tv: I never expected one of the Murdochs to say they’re planning to “deliver compelling experiences in esports, video gaming and entertainment.” 21st Century Fox’s $100 million investment in Caffeine includes funding for Caffeine Studios, jointly owned by Fox Sports and Caffeine, which will produce esports and live entertainment content for the social broadcasting platform.
It’s a bit on the tardy side, given that Disney+ is launching this month (November); AT&T’s WarnerMedia recently dropped $500 million on Big Bang Theory; and Apple TV has stepped up its game.
The strategic question is obvious: does it make sense for Fox to go it alone, or will it find out 18 months from now that it should just syndicate its content through a more popular platform?
An important part of the answer will have to do with whether it will it be different enough. Fox does have a lot of live sports, although much of that may already be tied to services like Fox Sports Live and Fox Go. Nowadays everyone has their own subscription video on demand offering. (It’s much more exciting to bring new services where there currently are none, like Apple Arcade, the iPhone game subscription service. But I digress.)
Another component revolves around the question whether Caffeine can convince the existing audiences for Twitch and YouTube to move over. Just recently we saw Ninja packing up and moving over to Mixer, which worked well for Microsoft. And Twitch barely skipped a beat. I believe that the pedigree of Caffeine’s leadership will likely result in the most beautiful, intuitive live streaming interface as one would expect.
Last year Caffeine snagged Jen Folse, a lead designer of Apple TV, and installed her as vice president of product. (Caffeine was founded by two other former Apple TV designers, Ben Keighran and Sam Roberts, in 2016.) Since Folse’s arrival, the emphasis at Caffeine seems to be on delivering the coolest product. But who’s going to watch it? And, most importantly, what are they going to be watching?
Yes, there are currently around 900 million people that watch gaming video content globally. And yes, this audience is an obvious early adopter that will help media companies work out the kinks as they transition away from traditional broadcasting to Internet-based television. But that means Caffeine will be competing head-on with YouTube, Twitch, Mixer and every other streaming widget released by media firms.
Fox is investing in a product that is not even live yet while every single one of its competitors has already fleshed out a multi-billion-dollar content strategy.
My prediction: Apple will buy Caffeine.tv in the next 12 months as it recognizes that it will need a foothold in the gaming market that goes beyond just mobile games. Microsoft did the same with Beam (now Mixer). Caffeine.tv’s leadership are mostly ex-Apple anyway, so they’ll have the credibility and necessary in-roads to make it happen. They just need to build a big enough audience to get Apple to open its wallet.
Hey! I teach at @NYUStern, founded and sold @_SuperData to @Nielsen, and write a weekly newsletter on gaming, tech, and entertainment. You should SUBSCRIBE.