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Tencent, Sony Ramp Up Cloud-Gaming Initiative Investment Via Japanese Venture Ubitus: Bloomberg

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Tencent Holdings Ltd (OTC: TCEHY) and Sony Corp (NYSE: SNE) augmented investment in cloud gaming by joining Japanese venture Ubitus K.K.’s latest fundraising round, Bloomberg reports.

  • Cloud-gaming technology and services provider Ubitus completed an investment round led by Tencent, Sony Innovation Fund by IGV, and Square Enix Holdings Co Ltd (OTC: SQNNY) (OTC: SQNXF) for an undisclosed sum. The investors chipped in around $45 million at a valuation of less than $400 million.
  • Ubitus’s partners include Nintendo Co Ltd (OTC: NTDOF) (OTC: NTDOY), which offered cloud-based versions of Capcom Co Ltd’s (OTC: CCOEF) (OTC: CCOEY) Resident Evil and Ubisoft Entertainment (OTC: UBSFF) (OTC: UBSFY) Assassin’s Creed on the Switch. 
  • Square Enix used the start-up’s technology to run its popular Dragon Quest X online multiplayer role-playing game. Ubitus’s cloud-gaming patents are known for low latency.
  • Tencent has been focusing on cloud gaming for the accessibility of high-end games without expensive hardware like consoles or computers. Cloud-gaming services deliver games from servers over the internet to users’ TVs, smartphones, and other screens akin to Netflix Inc’s (NASDAQ: NFLX) content streaming services. Tencent was also assisting Japanese cloud gaming platform OOParts to exploit the technology.
  • Cloud gaming continued to remain challenged by the popularity of gamers’ hardware. Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) Google’s Stadia service was challenged by communication latency and plan pricing. Stadia’s game industry veteran Jade Raymond recently departed to focus on a PlayStation game.
  • “Cloud gaming longer-term will ease the development burden of making games for multiple platforms, expand gaming into new geographies and drive higher subscription revenue, but it remains a ways off from being a main platform,” said Bloomberg analyst Matthew Kanterman.
  • Many video-game platform owners still vouch for the co-existence of the gaming technology with the console-based business models. Sony’s PlayStation Now and Microsoft Corp’s (NASDAQ: MSFT) Project xCloud offer streamed games to subscribers.
  • Price action: TCEHY shares are trading lower by 0.61% at $81.15 in the after-hours session on the last check Wednesday.
 

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