Cloud Gaming Takes Another Hit – Blade (Shadow) Files for Bankruptcy

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Cloud gaming is fraught with difficulties. Not only does it cost a hell of a lot of money to get started, but you've also got to find the parts to sustain growth if people want to use the service, and that's if you even find the people for the service. Shadow, the cloud-gaming based service operated by Blade, seemingly has the customers, but it lacks the parts and the funds. Sadly, unless they find the investment they seek, the future has a shadow hanging over it.

On the 2nd of March, the Paris Commercial Court began receivership proceedings against Blade (Blade SAS). As a result, 2CRSi - the server provider used by Blade - indicated that they have the right to take €30.2m worth of hardware (at the time of purchase) currently used by Blade for the Shadow service. This is based on receivables of €10.8m, of which there is also €3.7m worth of corresponding financial debt.

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The company has indicated that the servers are, by contract, their property until all lease payments or instalments were paid. With the current shortage of hardware, 2CRSi is very aware of the value of these items. They indicate as much, saying:

These servers that 2CRSi could take over are high-end graphics card (GPU) based compute servers and storage servers. Given the shortage of electronic components and more specifically graphics cards since the end of 2020, there is a strong demand on the market for this type of equipment and 2CRSi has already received indications of interest from several customers for the servers involved.

In addition to this, the US arm of Blade (Blade Corp) also filed for bankruptcy in the California Northern Bankruptcy Court on the 3rd, the day after the European arm went into receivership. 2CRSi has also indicated an even higher amount of receivables, with an almost equivalent amount of recoverable hardware to the European arm.

Four days ago, Blade posted a statement on the Shadow website indicating that the shadow service is a smashing success, that history has proved them right, and that Shadow is a victim of its own success.

They are vindicated, to a point, by stating, "4 out of 5 GAFAM launched a “cloud streaming” service". However, this is an argument I made when Stadia was launched; it will always be niche until the infrastructure is there. Google has all but abandoned Stadia after just a year of launching it. Apple and Facebook's service is very limited in the type of games offered, not quite in the same league. Then we have Microsoft, which is really driving forward with xCloud. Finally, Amazon has announced Luna, and only time will tell if that has staying power.

It is also claimed that Shadow has a waiting list of thousands, eventually finishing by saying:

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This new stage requires a fresh new start. We will undergo a reorganization in order to free ourselves from the debt holding us back to continue the development of our bleeding-edge technology. This investment process goes through the inevitable stage of collective proceedings, in France and in the United States, which will give us the best chance of achieving the dreams and ambitions we set out to accomplish since day one.

Strengthened and emboldened by our experience, we now have a better understanding of the conditions for success. Thus, Shadow's adventure will continue. Even more, this operation gives us the opportunity to grow at a rate faster than ever. During this transition period, we will continue to develop our technology and provide the best service to our members and community, who are key to Shadows’ long-term success.

Shadow is a good product. I had to admit that, and I was impressed when I previewed it. I found shadow far more interesting than Stadia because it is a full desktop you are streaming, giving you full access to every title you own. The potential is there, but the push for rapid expansion and the scarcity of components have created a perfect storm that pulls Blade down.

If the proceedings go as planned, a new investor is found, and the company can retain its hardware, Shadow could still be a strong choice. The only openly interested investor appears to be Octava Klaba, who wants to develop a European alternative to Office 365/G-Suite.

News Source: GamesIndustry