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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Facebook Inc    FB


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Facebook Moves Into Cloud Gaming

10/26/2020 | 09:11am EST

By Sarah E. Needleman

Facebook Inc. has become the latest tech heavyweight betting that the future of videogaming is in the cloud.

The social-media company is adding Netflix-like streaming of games to its Facebook Gaming platform at no cost to players, a move expanding its content library to include more-complex and multiplayer titles. Its free-to-play model is in contrast to the paid, subscription cloud-gaming services that rivals such as Alphabet Inc.'s Google and Microsoft Corp. have introduced.

Six games including auto-racing title "Asphalt 9: Legends" will be available for users to play in some parts of the U.S. on Facebook's Android app and desktop website, the company said Monday. Facebook plans to add more cloud games and expand geographic access to them over time.

Gaming has become a key battleground for tech companies seeking a financial windfall in a medium where people world-wide are increasingly spending more time and money. That competition is taking place, in part, in the cloud since players can avoid downloading games to their devices, which take up memory, and don't need to invest in gaming hardware such as a console or a high-end computer. The technology is difficult for companies to execute smoothly, though, because games need to support multiple players with minimal delay regardless of their locations.

"Cloud gaming helps shed the technical limitations of our past, while bringing us back to our roots at the same time," said Jason Rubin, Facebook's vice president of play. "Facebook has always been about delivering games that are free, social and accessible to as many people as possible."

Within the past year, Google, Microsoft and Amazon.com Inc. have launched subscription-based cloud-gaming services, while chip maker Nvidia Corp. and electronics maker Sony Corp. have had their own offerings longer. The services cost between $5 and $15 a month, and the selection of games they offer vary, with some featuring mainly older games rather than new releases.

Sony's cloud-gaming service PlayStation Now had 2.2 million paid subscribers as of April. Nvidia's GeForce Now had 4 million registered users as of August, including free and paid subscribers.

Google and Microsoft haven't disclosed paid subscriber numbers for their cloud-gaming services.

Analysts said adoption of these services has been slow because their libraries are light on big hits; people might not have friends who are also subscribers to play with; and it requires reliable, fast internet for an optimal experience.

By taking baby steps into cloud gaming and doing so after its big-tech peers, Facebook is demonstrating caution, said Lewis Ward, research director of games and virtual and augmented reality at International Data Corp.

"They're going to walk before they run," he said. " They saw Stadia fall on its face, so they're tamping down expectations out of the gate. It's probably a 10-year investment strategy to get to where they want to go."

Google didn't immediately respond to a request for comment.

Facebook's Mr. Rubin said that some 380 million people play games on the company's platform each month and that the company isn't trying to quickly match rivals' services. He said adding new titles is challenging, but that will change over time. "It's not a lot of work for the developer, but it's a decent amount of work on our side," he said. Facebook's move into cloud gaming comes after it last year acquired PlayGiga, a company in Madrid that specializes in the technology.

Boosting the amount of time people spend on Facebook is essential to the company's business model as it relies on advertising to generate revenue. Facebook in July said it has 2.7 billion monthly users.

The coronavirus pandemic has fueled growth for the videogame industry. Some 29% of U.S. adults ages 18 to 64 say they have been spending more time gaming since the pandemic began, according to survey data from technology consulting firm Activate.

For Facebook, one barrier to adoption of its cloud-gaming strategy could be whether its service will be allowed on Apple Inc. devices. Over the summer, Apple rejected Facebook's submission for a stand-alone app that would have enabled people to get instant access to web-based games. Apple later approved the app after Facebook reluctantly agreed to remove the games from it.

Microsoft in August said it was disappointed with Apple after the iPhone maker rejected its cloud-gaming app from the App Store.

An Apple spokesman said it supports all developers who wish to bring a cloud-gaming service to the App Store, which they can do by submitting each game offered through it as an individual app for consideration. This means users would need to download any such games that Apple approves to an Apple device to play them.

Mr. Rubin said requiring users to download Facebook's cloud games "defeats the purpose of cloud gaming" and so Facebook is unlikely to participate in Apple's submission process. "It's not going to serve the purposes we want," he said, "which is to make it easy to jump in and out of games."

Write to Sarah E. Needleman at sarah.needleman@wsj.com

(END) Dow Jones Newswires

10-26-20 1010ET

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Net income 2020 26 870 M - -
Net cash 2020 63 906 M - -
P/E ratio 2020 28,8x
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Sheryl Kara Sandberg Chief Operating Officer & Director
David M. Wehner Chief Financial Officer
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