M&A Q4 2019: Companies seek to prime their offerings as cloud gaming era looms

At this stage, cloud gaming remains a nascent threat to established platforms and hardware offerings. IHS Markit Technology forecasts a market size of $2.5bn by 2023, which will represent less than 2% of the broader games market. However, the future potential of the cloud platform as the next competitive dynamic of the games sector has triggered an increase in the number of cloud-related acquisitions and funding rounds. Companies want to be as well-equipped as possible to compete in this emerging field.

Many businesses are employing cloud technology to enhance and streamline the game development process. Hong Kong-based Area28 obtained $2.2m in seed funding for the accelerated development of its “world-first” cloud-based collaboration platform and game engine, which is designed to facilitate remote, interactive game development for geographically dispersed teams. In a similar vein, software development giant Unity Technologies acquired the UK company ChilliConnect, who offers a cloud-based, all-in-one live game management solution for developers comprising live-ops, backend services and analytics. Unity Technologies also acquired French virtual architecture firm Obvioos, creator of the Furioos platform, a cloud-based video streaming service which allows streaming of 3D applications to any device with an internet connection.

Game creators are also seeking financial support to progress their cloud offerings. Developers from renowned Finnish studios including CCP Games (EVE Online), Remedy (Alan Wake, Control) and Next Games (The Walking Dead: Our World) recently joined forces to launch Mainframe Industries, raising over $2m in seed funding. The studio is aiming to develop an open-world, sandbox MMO game which will take advantage of the unique features that cloud gaming platforms offer. For Mainframe, the appeal of cloud gaming lies in the ability to deliver immersion and world simulation across multiple platforms with the consistent quality of a high-end PC.

In December, Facebook acquired PlayGiga, a Spanish cloud-gaming start-up. Whilst there is no concrete confirmation that Facebook will use this to launch its own cloud gaming service, the acquisition of PlayGiga would allow Facebook to fast-track such a service to market. This could see the company competing directly with other cloud services from Sony, Microsoft and Google. Facebook has traditionally relied on advertising revenue, and its recent investments into companies such as PlayGiga and Beat Games (creator of hit VR title Beat Saber) suggest an attempt to diversify revenue sources, and also a desire to capitalise on the burgeoning games market in light of new technologies such as 5G and cloud.