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

Tencent Holdings Ltd TCEHY and Sony Corp 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 SQNNY 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 NTDOF NTDOY, which offered cloud-based versions of Capcom Co Ltd’s CCOEF CCOEY Resident Evil and Ubisoft Entertainment UBSFF 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 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 GOOG 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 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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