Activision Blizzard Inc. is in talks with several global cloud-computing providers over the potential to provide streaming videogames, the company said Thursday.
Chief Operating Officer Collister Johnson said on a quarterly earnings call with investors that because of the company’s interest in the up-and-coming technology, Activision ATVI, +1.34% is in talks with “global tech platform providers and about their cloud infrastructure and potential streaming solutions.” Johnson did not specify which providers it was in talks with.
The largest three U.S. providers of cloud-computing services are Amazon.com Inc. AMZN, +2.07% Microsoft Corp. MSFT, +1.21% and Alphabet Inc. GOOGL, +0.66% GOOG, +0.50% through its Google unit. All three of those tech giants are involved with videogames themselves through various subsidiaries and units.
Activision declined to comment on potential cloud vendors.
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Cloud gaming is far from a certain new technology because significant hurdles remain — even the likes of Nvidia Corp. NVDA, +1.68% which has deployed videogame-streaming software called GeForce now for several months, says it’s not yet ready to turn out a full-fledged product. Rival game-maker Electronic Arts Inc. EA, +0.92% also unveiled a technical cloud gaming demo earlier this year, but not a full product.
One of the most significant problems is the tiny delay, measured in milliseconds and known as latency, between a player and the data center where the game is streaming from. Because games are interactive and a split-second delay can be the difference between a character’s life or death, it’s not possible — at least yet — to predownload videogame data in the same way that Netflix does to seamlessly stream movies despite network interruptions.
“Latency requirements mean a lot in gaming, [they are] live, measured in milliseconds and can disrupt the gaming experience in a way that, it doesn’t really matter for watching a movie or a TV show,” Johnson said on the earnings call. “And so we feel like there’s still work to be done before the tech is ready for mainstream adoption. So we do think this will happen. Probably not in the near term and we’re well-positioned when it does.”
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Late Thursday, the company reported quarterly profits of $402 million, which amounts to 52 cents a share, on net bookings of $1.38 billion. Net bookings is a financial metric commonly used by videogame companies because it accounts for the accounting complexities of physical and digital sales, among other things.
On the earnings call with analysts, Johnson said the company thinks that cloud streaming — industry shorthand for a Netflix-like videogame service — will lead to faster growth because it may expand the audience of players to people who don’t have or can’t afford expensive gaming computers. It also means that avid fans can play on more devices and in more places.
“Even for existing gamers, streaming systems should be able to provide more easily accessible experiences, reducing friction, enabling deeper ongoing engagement throughout the day as the content is more available,” Johnson said.
Activision stock was down less than 1% in after-hours trading and closed up 1.3% to $74.06 during the regular session. Activision shares have gained 17% this year while the S&P 500 index SPX, +0.49% has risen 5.8%.
