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EA's Latest Buyout to Strengthen Position in Cloud Gaming
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Electronic Arts (EA - Free Report) recently acquired cloud gaming technology assets and personnel of a wholly owned subsidiary of Gamefly Inc. The takeover is in sync with the company’s focus on expansion of its streaming services, which it expects to launch within the next two to three years.
EA has been developing infrastructure to offer streaming services for some time. Notably, the company had offered streaming services through partnership with Comcast’s (CMCSA - Free Report) Xfinity.
GaaS Presents Strong Growth Opportunity
Cloud gaming or streaming of video games or Gaming-as-a-Service (GaaS) refer to game that is stored on a company’s cloud platform rather than on the gamers’ device. A player can access the game at any place and at any device through a client program.
Extensive availability of high-speed internet that lowers access time and increasing adoption of mobile & portable devices are driving demand for cloud gaming. Increasing proliferation of cloud gaming primarily benefits the consumer, as the cost of purchasing games decline significantly when compared with a subscription package.
Per data from ResearchandMarket.com, the cloud gaming market is projected to increase at CAGR of 26.12% during 2017-2023 time frame to reach a total market size of $4.28 billion. This presents strong growth opportunity for EA in the market, which has attracted prominent players like Sony , NVIDIA (NVDA - Free Report) and Microsoft (MSFT - Free Report) .
Sony leads the Pack in GaaS
Sony is the leading company in the cloud gaming market based on its PlayStation Now service that has subscription packages of $19.99 per month, or $44.99 per three months. The package includes more than 600+ playable games. A gamer can play these games on PC by using a Playstation 4 controller.
NVIDIA’s GeForce Now, which is currently in closed beta, also provides a solid PC gaming experience driven by robust graphics, low latency and impressive video quality. The service supported games from Steam and Uplay, including Call of Duty: WWII, Hearthstone, Middle-earth: Shadow of War, PUBG, Rainbow Six Siege, Stardew Valley, and Wolfenstein 2.
Notably, Microsoft is also developing an Xbox game-streaming service that it is expected to launch by 2020. The company recently unveiled a new gamepad, Xbox Adaptive Controller, which is aimed to ensure “gaming for everyone”. The controller, priced at $99.99, can be personalized as per the requirements of the gamer.
However, Amazon’s (AMZN - Free Report) cloud division Amazon Web Services is focusing on game developers. The company has launched Amazon GameOn, a cross-platform, competitive gaming service, which is being used by in games ranging from casual to core across different genres.
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
EA's Latest Buyout to Strengthen Position in Cloud Gaming
Electronic Arts (EA - Free Report) recently acquired cloud gaming technology assets and personnel of a wholly owned subsidiary of Gamefly Inc. The takeover is in sync with the company’s focus on expansion of its streaming services, which it expects to launch within the next two to three years.
EA has been developing infrastructure to offer streaming services for some time. Notably, the company had offered streaming services through partnership with Comcast’s (CMCSA - Free Report) Xfinity.
GaaS Presents Strong Growth Opportunity
Cloud gaming or streaming of video games or Gaming-as-a-Service (GaaS) refer to game that is stored on a company’s cloud platform rather than on the gamers’ device. A player can access the game at any place and at any device through a client program.
Extensive availability of high-speed internet that lowers access time and increasing adoption of mobile & portable devices are driving demand for cloud gaming. Increasing proliferation of cloud gaming primarily benefits the consumer, as the cost of purchasing games decline significantly when compared with a subscription package.
Electronic Arts Inc. Price and Consensus
Electronic Arts Inc. Price and Consensus | Electronic Arts Inc. Quote
Per data from ResearchandMarket.com, the cloud gaming market is projected to increase at CAGR of 26.12% during 2017-2023 time frame to reach a total market size of $4.28 billion. This presents strong growth opportunity for EA in the market, which has attracted prominent players like Sony , NVIDIA (NVDA - Free Report) and Microsoft (MSFT - Free Report) .
Sony leads the Pack in GaaS
Sony is the leading company in the cloud gaming market based on its PlayStation Now service that has subscription packages of $19.99 per month, or $44.99 per three months. The package includes more than 600+ playable games. A gamer can play these games on PC by using a Playstation 4 controller.
NVIDIA’s GeForce Now, which is currently in closed beta, also provides a solid PC gaming experience driven by robust graphics, low latency and impressive video quality. The service supported games from Steam and Uplay, including Call of Duty: WWII, Hearthstone, Middle-earth: Shadow of War, PUBG, Rainbow Six Siege, Stardew Valley, and Wolfenstein 2.
Notably, Microsoft is also developing an Xbox game-streaming service that it is expected to launch by 2020. The company recently unveiled a new gamepad, Xbox Adaptive Controller, which is aimed to ensure “gaming for everyone”. The controller, priced at $99.99, can be personalized as per the requirements of the gamer.
However, Amazon’s (AMZN - Free Report) cloud division Amazon Web Services is focusing on game developers. The company has launched Amazon GameOn, a cross-platform, competitive gaming service, which is being used by in games ranging from casual to core across different genres.
Zacks Rank
Currently, EA has a Zacks Rank #3 (Hold), while Sony carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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