Tencent Holdings and Sony Corporation are betting big on cloud gaming by joining the latest fundraising round of Japanese venture Ubitus K.K, according to Bloomberg.
Ubitus, which specialises in cloud-gaming technology and services, said that it has completed a round with investments from Tencent, Sony Innovation Fund by IGV and Square Enix Holdings, without disclosing the amount raised. The investors put in is about $45 million at a valuation of less than $400 million, a person familiar with the matter said, asking not to be identified because the details aren’t public.
Tencent has been stepping up its efforts to foster cloud gaming, which allows consumers to enjoy high-end games without owning expensive hardware such as consoles or computers. Just as Netflix streams movies, cloud-gaming services deliver games from servers over the internet to users’ TVs, smartphones and other screens. Tencent said on Monday that it was helping OOParts, a Japanese cloud gaming platform, to capitalise on the technology.
Yet cloud gaming has faced challenges even as wireless connections get better, with most enthusiasts sticking to titles that use gamers’ own hardware. Excitement provoked by Alphabet Inc.‘s Google didn’t last long as its Stadia service ran into challenges with communication latency and plan pricing. Stadia has shrunk much of its ambitions and Jade Raymond, a game industry veteran who was a marquee hire for Stadia and recently left, has set up a studio to work 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 Intelligence analyst Matthew Kanterman.