Google shuttered its games development division after it missed user goals and sales targets by hundreds of thousands, according to a new report.

Last month, Google announced it would stop developing games in-house through its Stadia division, with 150 employees to be laid off, after it had been up and running for just two years.

Stadia had only been launched in November 2019 to be a Netflix-style games platform, with Google to also offer its own games and controllers.

At the time, Stadia VP Phil Harrison labelled it the “future of gaming”.

But the company announced in early February that Stadia Games & Entertainment (SG&E) would be shutting down, with the platform to remain, offering third-party games.

“We’ve decided that we will not be investing further in bringing exclusive content from our internal development team SG&E beyond any near-term planned games,” Harrison said last month.

“Creating best in-class games from the ground up takes many years and significant investment, and the cost is going up exponentially.”

A number of reports this week have now laid bare the issues with Google’s games division and the reasons behind its demise.

Bloomberg reported that Stadia had missed its monthly active user goals by hundreds of thousands of people, and was also far off its aim for controller sales.

In a report citing a number of current and former Stadia employees, Wired detailed how Google’s approach to games as a technology and engineering company set it up for failure.

“I question how much the execs above Stadia leadership understand what they go into – the commitments made and over-commitments and the inability to keep those commitments,” one employee told the publication.

The report said Google had planned to hire 2,000 people over five years for the games division, but ended up laying off its 150 employees after just two years of operation.

A number of employees said Google was not prepared for the way games development companies operate.

“Google is really an engineering and technology business,” a current employee said. “Making content – it requires types of roles that don’t typically exist at Google.

“I think it’s a lack of understanding of the process. It seemed there were executive-level people not fully grasping how to navigate through a space that is highly creative, cross-disciplinary.”

The Bloomberg report also said Google had paid “tens of millions of dollars” to get major games companies including Ubisoft and Take-Two to allow their games to be featured on Stadia.

Jason Schreier, the journalist behind the report, has since clarified that this was per game, with Google reportedly paying $US20 million to get ‘Assassin’s Creed’ and ‘The Division’ on Stadia.

“Stadia had a lot of issues, but its fatal flaw was marketing,” Schreier tweeted. “If it had started with a muted launch and grown from there rather than promising to be the ‘future of gaming’ and trying to take on Xbox / PlayStation right away, we might be telling a different story right now.”