The Fatal Blockchain Blow for VectorDash? Google Stadia and a Shaky Business Model
VectorDash, one of the new blockchain based startups, has been working to carve out its own place within the industry by serving as one of the new products that emphasize the use of cloud-based gaming, as well as offering its own Gaming as a Service product (GaaS).
While it's working to make a name for itself, it may very well be one of the first platforms to reward GPU miners for making use of its hardware.
VectorDash made its push into the world of cloud gaming public through an announcement through the tech journalism site – TechCrunch – where the team announced that it would be introducing users to GPU rental.
Along with this announcement, the team went on to disclose the introduction of its new game launcher built with the use of cloud-based technology. The latter is currently in the process of integration into the platform, according to the VectorDash team.
So what kind of business model is it that VectorDash has? Really the objective of the company is to allow owners and budding gamers making use of computers without the processing and rendering powers necessary to play graphics demanding titles on their computers.
With VectorDash, these same players will be able to play high graphics demanding titles through the use of rented GPUs and cloud-computing in order to provide them with a remote vector for these games.
While this isn't exactly a new concept, VectorDash has found a new and interesting way of providing the GPU power needed in order to make this kind of solution possible. It does so by advertising and providing a system of rewards and incentives for those with high-quality GPUs interested in joining its network.
A Second Stab at the Industry?
While this is the model that the company has decided to press ahead with, this is actually the second time that VectorDash has made use of this kind of GPU & Cloud computing model. The company, having been initially established with the objective of providing this model to those involved in the research of Artificial Intelligence.
The underlying concept of VectorDash is that its model would provide those with powerful GPUs to have an alternative and steady source of additional income, either as an alternative or in addition to cryptocurrency mining.
While this was the initial business model set up by the company, it didn't really have the intended popular reception that VectorDash was looking for. As a result, the team officially pivoted over to the world of cloud gaming.
Has this been a good move from the company? Well, the world of cloud gaming has been steadily growing over the last few decades. One thing that has been helping is the converging interest of both public and commercial solutions, supported by the advent of steadily improving internet services.
All of these developments culminated in the creation of a vastly improved suite of services for gamers, giving them the potential for high-performance, lag free video gaming streaming services.
While this spells out a more effective business model for VectorDash, experts, and investors are not exactly convinced with the business model put forward by the company as of yet, and is less convinced that it has something in the way of a robust business model for long term sustainability.
And considering there are a number of platforms that have ventured into the same industry, only to go bust a little while later, these investors need something more concrete before they start diving in to invest.
GPUs – A Question of Renting or Mining
So what is the incentive for those looking to join VectorDash's ecosystem? According to the team, it will be offering anywhere from $60 and even $105 per month for those interested in contributing GPU processing power, however much, to the network.
The question remains, however, whether this is the actual rate going forward, or if this is an inflated rate for the pioneering first people joining. It remains to be seen.
Along with this offer to those interested in lending out their GPUs, the only real revenue stream that the company would have to its name would be the subscription charges paid by those looking to make use of its GaaS solutions. This means that that $28 per head would have to support these initial incentives paid to GPU providers.
It's not as though gamers paying the $28 will be short-changed, however. As they would able to effectively run any kind of high-quality title on their machine.
It's with this in mind that investors start to have concerns, as there have yet to be specifics provided by the company about how exactly its payment plans will work on a longer-term. When we consider the fact that its model hinges upon loaning out high-performance GPU on a 24/7 basis, the running costs could easily outstrip any semblance of revenue.
Were it to establish itself in areas of the world where electricity were in ample surplus, then VectorDash would very well be welcomed as a solution. But were it to establish itself in more developed areas of the world, like Germany or Belgium, then its revenues would have to contend with exceptionally high energy costs, as well as a tough to sell financial system could end VectorDash before it begins.
A Feasible Model to Sell? VectorDash
So if high energy costs, as well as a very expensive overhead of paying GPU providers $60-105 per month, VectorDash needs to be making its money from more than just monthly subscriptions. The mathematics of how it can have more than a break-even solution to its model is if there are 2-4 customers streaming and making use of the computing power of one GPU provider.
Is this an unrealistic ratio to consider for VectorDash? Not really, it's very possible to carry this kind of number of processors to customers, the company really needs to delve more into the kind of operating costs associated with this kind of ideal ratio. VectorDash needs to consider this and find a way to overcome these challenges, especially if they are to avoid the fate of their contemporaries.
One of the issues that comes up as well is the fact that VectorDash intends to draw in those from the cryptocurrency mining world. And while this means that there is a reliable pool of GPU owners to call upon, this means that it's far more likely that these will be seasonal entities within its ecosystem. Meaning that these miners will come and go, depending on the profitability of mining.
The Hated One-Two Punch – Google Stadia and WalMart
There are a number of gaming startups out there that offer this cloud-based, GaaS solution, and they are understandably contributing to a wider disruption of the gaming industry as we know it.
But this is where VectorDash represents an interesting intersection: it is a new startup working to include a relatively old idea along with the new. So what is this infusion exactly? Cloud-based gaming, mixed with blockchain technology. Which puts it very much on the same kind of platform as Moonify, PlayKey, or even Freeloadr as it aims to disrupt both markets at the same time.
But when we consider the fact that there are already a good deal of competitors within the cloud gaming world, VectorDash is setting itself up for an uphill struggle somewhat, especially if it intends to carve out a segment of this market.
Some of the previously mentioned companies also include the likes of TwitchPlay, Forte, and Ubitus, all of these have a similar business model – combining Blockchain as well as cloud-based gaming solutions.
So is the way still relatively navigable for VectorDash? No, and it's likely to have faced a proverbial and deadly one-two punch in the shape of the recent announcement from Google that it would be venturing into the cloud computing world.
Announcing its product, known as ‘Stadia,' the project has an immediate advantage, given that it will be backed using the absolutely digital juggernaut of googles cloud infrastructure.
So, while VectorDash will have to venture through all of the trial and error that a startup must endure, Google will have the power of financial scalability on its side from the outset. And along with having the ability to directly advertise to an international community of customers on Youtube – Stadia will be at the cutting edge of any push into. the cloud-based gaming industry.
While VectorDash is already placed at a significant disadvantage compared to its rivals, both due to the monthly costs of subscription for members, as well as now having some multinational, tech behemoths now entering the fray, it is not at all going to be at the top spot when it comes to costs for customers, and bang for their  buck[s].
Consequently, the company now has the choice of relying more upon its decentralized ecosystem of GPU providers, and that's what gives it the potential trump card when it's placed face to face with any rivals in the industry.
But while this is something that sets it apart, this is not a practical long-term solution if its player numbers do not align well with its existing community of GPU providers.
What Crippled Other Companies
One of the other factors that is of a great deal of importance for VectorDash to consider is the matter of geography, especially when it comes to where they intend to enlist miners from in order to make use of their GPUs.
At the moment, the hot spots for cryptocurrency miners happen to be Iceland, China and Georgia, which are far more remote when compared to where else these same miners could be set up.
Now, at face value, this would not seem like too much of an issue. That is until you realize that game streamers within this kind of system require a very low (or as low as possible) level of latency.
If VectorDash is not able to provide this, then there will be delays between the sending and subsequent receiving of packets of data, getting even higher as depending on how remote their GPU providers are.
The consequence for the company? It would render these high quality games laggy and unplayable for many, killing off any kind of incentive for players to engage with VectorDash and its services. The solution? Cut down this distance that can exist between players and GPU providers, and this can only be possible if geographical distances weren't so far.
And with the majority of hardware power coming from areas like China, and with potential customers being in the western hemisphere, it doesn't exactly bode well.
Apart from this issue, the whole business model of cloud-based lending of GPU power doesn't have many strong models of application at this moment in time. Currently, the only practical applications that exist are for Artificial Intelligence Research and cloud-based gaming.
Out With The Old and In With The New
One of the net positives for the VectorDash team, specifically with regards to its business model, it won't need such a large volume of upfront investment in order to help create the infrastructure needed to get started.
But even with that in mind, a good deal of the money that VectorDash would manage to draw in from its subscription base will be re-invested into its GPU-power providing system, which would mean that the profit margins for the company will be relatively small during the first quarters.
It's with these factors in mind that questions emerge about whether or not the company will be able to offer a competitive, longer-term model for business as months stretch into years. And really, that depends upon how quickly it can extend its reach from the regional, to the truly international, and if it has the ability to scale up its services for users with the limited revenue that it will be drawing in.
One of the challenges that come from VectorDash's business model is also the fact that its monthly subscription is actually more expensive that the majority of its competitors in operation so far.
But, it's with this in mind that the question must be asked about how the company can actually encourage gamers to make use of its services and platform. This is specifically since this very same competitor cloud-gaming services have solved the bottlenecks and challenges that VectorDash will need to confront in the near future.