Google’s Stadia Game Streaming Service Has Great Tech But Few Games
Follow James on Twitter @jwangARK
Following in the footsteps of music, video, and enterprise computing, gaming is moving to the cloud. Running computer games in a cloud data center eliminates the need for expensive gaming consoles and PCs, opening up gaming to the mass market. The most popular console in history—Playstation 2—has sold roughly 160 million units to date, reaching not even 5% of internet users worldwide.
Google’s new Stadia game streaming service is its attempt to go mainstream with high quality video games. Powered by Google’s own data centers and a custom AMD GPU, Stadia will offer twice the graphics performance of existing consoles. Leveraging Google’s cloud computer expertise and its partnerships with internet service providers, Google aims to minimize latency and provide fast 4K gaming with a connection speed of only 30 Mbps.
Cloud-based game streaming is not a new idea: On Live, Gaikai, and Nvidia all have attempted it. Sony’s Playstation Now is the most mature offering, streaming more than 700 games for a $20 monthly subscription.
While well positioned to solve the technical and infrastructure problems, Google needs to sell streaming games as a subscription, a business model problem. Moreover, it has no catalogue. Stadia is a new console launch - albeit in the cloud - that will require years of attracting developers, promoting games, and acquiring customers, a task that both Sony and Microsoft started more than a decade ago. Stadia’s ultimate success will depend as much on Google’s business savvy as its cloud prowess.
Jack Dorsey Announces Square Crypto
Follow Yassine on Twitter @yassineARK
On Twitter this week, Jack Dorsey announced that Square will hire “3-4 crypto engineers and 1 designer to work full-time on open source contributions to the bitcoin/crypto ecosystem.” Square Crypto will be an effort to give back to the open source community.
Asked about Square’s commercial interests in the crypto community, Jack responded, “As long as we’re in business, [Square Crypto] will not be led or incentivized by our business incentives.”In addition, Square Crypto will be the “first open source initiative independent of Square’s business objectives. These folks will focus entirely on what’s best for the crypto community and individual economic empowerment, not on Square’s commercial interests. All resulting work will be open and free.” While supporting the open-source community is aligned with Square’s long-term success, Jack’s decision to distinguish between supporting open source and generating profits has resonated in the crypto community.
To date, few crypto companies have hired full time open source contributors. Square seems willing to forego short term profits to gain what it believes to be significant returns long term, as Bitcoin’s success will be Square’s success.
Fintech Companies are Leveraging Alternative Data
Follow Max on Twitter @mfriedrichARK
Peer-to-peer lending companies such as LendingClub (LC) differentiate themselves from traditional lenders with alternative data and artificial intelligence in assessing the credit risk of potential borrowers. Alternative data can include consumers’ payment history (e.g. utility, rent, phone, alimony), cash-flow data from bank accounts such as salary and cash withdrawals, credit card transactions, medical and insurance claims, personal data such as education and degrees, data from social networks, other online data such as loan applications and geographic location.
A recent study by the Federal Reserve Bank of Chicago suggests that, by leveraging alternative data sources, LendingClub can serve borrowers with low credit scores at lower interest rates than those charged by traditional banks. LendingClub itself believes it has saved borrowers $2.4 billion in loan costs since its inception.
Over the years, LendingClub has optimized its credit risk assessment model with more alternative data, lowering its reliance on traditional credit metrics such as the FICO score. It has decreased the correlation between its proprietary grades and FICO scores from more than 75% in 2007 to 35% in 2015, as shown below. With more data, presumably it is lower today.
In 2007, LendingClub’s lowest quality grade was comprised almost entirely of individuals with low FICO scores and its highest quality grade of those with high FICO scores. Over time, however, many individuals with low FICO scores moved up in LendingClub’s grade system, accessing loans with lower interest payments. In 2015, LendingClub was able to offer many borrowers with FICO scores below 680 credit terms similar to those with FICO scores over 750. Data made the difference.