Phynd (pronounced “find“), a new cloud gaming platform which is monetised by ads rather than a paid subscription, has formally launched, announcing it has raised $10 million in a seed round led by Wellington Management. The raise will fuel the continued development of Phynd’s platform, which will release in beta later this year.
Cloud gaming, for those unfamiliar, is where games are run on remote servers, rather than the end-user’s device. The user’s inputs are sent to this remote computer, which streams the video and audio back to the user’s device. This allows users to play games without having to download them and install them, enabling subscription models akin to TV streaming services. It also allows users to play on devices which aren’t built specifically for gaming, such as smart TVs, since all the processing happens remotely.
Cloud gaming technology, while still imperfect, is well established. But the big existing services, such as Xbox Games Pass and GeForce Now, all require paid subscriptions.
Phynd however sees big potential in an ad-funded model. The company was co-founded by André Swanston, previously CEO of CTV data company Tru Optik, who says the trajectory followed by TV streaming services could be a blueprint for cloud gaming.
“A decade ago, many experts claimed subscription streaming services would be the end of TV advertising,” said Swanston. “Today, advertising is set to become the largest revenue source for streaming TV. Consumers love free content, and an advertising-sponsored gaming platform done right is a win for everyone.”
A new player has entered the game
Part of Phynd’s value proposition comes from expanding video games’ total reach. Traditional set-ups require people to invest in expensive consoles and hardware, which is a big barrier to entry for potential new gamers. And for other cloud gaming platforms, the monthly cost can be off-putting. The growth of mobile gaming however shows that removing these barriers can open the doors to a much wider audience, including those that sit outside of demographics traditionally associated with gaming.
Phynd says its model will make gaming accessible to hundreds of millions of TV consumers who don’t own gaming consoles. The company says its platform will work across a range of devices, but smart TVs will be the primary focus, partly due to the size of the market (Phynd says 500 million smart TVs capable of supporting a cloud gaming app have shipped globally in the past five years). For developers, Swanston’s experience in data-based targeting could bear fruit here too, as Phynd says its analytics and marketing tools will help gaming companies engage and retain these potential new audiences more efficiently than traditional distribution methods.
The other part of the equation is bridging the disconnect between gaming’s popularity with consumers and its relatively low levels of ad revenues. Phynd cited data stating that games played on a TV or large screen generate around seven percent of revenue from ads or sponsorships, compared to 50 percent for the broader media sector. The company says it will connect up marketers with big screen games “through non-intrusive audience-based ads and sponsorships, addressing a longstanding market challenge while boosting industry revenues amid rising costs”.
Bringing ads to big-screen gaming audiences has so far proven tricky. Just yesterday, VideoWeek reported that Steam, a dominant force in PC game distribution, is explicitly banning in-game advertising — seemingly from a viewpoint of wanting to protect user experience.
But a major sticking point for many gamers is the idea of seeing ads in a game which they might have paid £60 or more for. With a free, ad-supported cloud gaming subscription, the value proposition is clear to consumers. And if targeting data is sufficient to command high CPMs, ad loads may be kept low enough to avoid being overly interruptive.
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