Facebook tries to reposition itself as a gaming platform with its big bet on cloud gaming

Facebook on Monday revealed a broad new cloud gaming strategy aimed at upending the lucrative and fast-growing mobile games ecosystem. While other tech behemoths — including Amazon, Google, Microsoft and Nvidia — have aimed their cloud gaming strategies at big-budget "AAA" titles, Facebook will attempt to leverage new data centers and its planet-spanning user base to reshape the world of casual free-to-play games.

As part of the new gaming initiative, Facebook will allow users to create an alternate "Player Name." While the company has allowed pseudonyms in the past in limited cases, Facebook has long emphasized the importance of real-name identities across its services. With Player Names, Facebook appears to be officially embracing selectable alternate identities for the first time.

The initial goal for the new cloud service is to let users instantly play full mobile-quality games within Facebook without having to download them from an app store. And along with instant gameplay comes instant marketing: Now, a Facebook ad for a video game may sometimes let users actually play the game itself.

Broadly, Monday's announcement appears meant to reposition Facebook as a major mass-market gaming platform for the first time since the FarmVille era a decade ago. When Facebook shifted to a mobile-first strategy, games largely fell by the wayside for the company. Yet mobile is generally thought to represent at least half of the global $160 billion video game industry.

Facebook acquired the Spanish cloud gaming company PlayGiga for about $80 million last year, but the contours of Facebook's overall cloud gaming plans had remained shrouded until now.

"If you want to reach more of the gaming audience, you have to deliver more advanced graphics and experiences, and that is the cloud platform," Jason Rubin, Facebook's VP of Play, said in an interview last week. (Rubin, a longtime game executive, transferred from Facebook's virtual reality operation to its Gaming division in the spring.) "You want to be able to deliver whatever type of game you want to deliver to the widest possible audience. This is the answer to that problem."

Unsurprisingly, Facebook's new gaming service will not work on Apple's iOS, at least for now. Apple is essentially locked in a war with much of the rest of the tech and gaming industries about its rules for games and commerce on its mobile devices. Instead, the service will launch on Facebook's Android and desktop versions.

"What's unique about Facebook's approach is the focus on free-to-play games," said Lewis Ward, an analyst at IDC. "The fact they're going to support ads in the service right out of the gate is also unique. And the orientation toward mobile games is also pretty distinct."

Facebook appears to be building its new cloud gaming data centers around graphics systems from Nvidia, though neither company would comment on a vendor relationship. As Facebook expands its cloud gaming-ready data centers, the service will be available initially in some Western, Mid-Atlantic and Northeastern parts of the United States.

Cloud-streamed games available this week include Asphalt 9: Legends by Gameloft; Mobile Legends: Adventure by Moonton; PGA TOUR Golf Shootout by Concrete Software; and Solitaire: Arthur's Tale by Qublix Games. Though Facebook invested heavily to subsidize individual games for its Oculus VR devices, Rubin was cagey about whether the company would also fund and develop its own cloud games.

Separately, companies initially advertising on the service include 2K Games, FunPlus, Gameloft, Glu Mobile, Gram Games, Rovio and Wildlife Studios.

In a wide-ranging conversation last week, Rubin explained more about the strategy, the company's battles with Apple, the technical challenges of delivering cloud games, Microsoft's deal to distribute its own xCloud games on Facebook, and the importance of the new identity policy.

This interview has been edited and condensed for clarity.

So why is Facebook investing in cloud gaming technology and this platform?

Over time, it's become more and more evident that the communities built around gaming are becoming bigger and a larger and larger part of people's lives.

We have a 700-million-person gaming community on Facebook today, but we think that's a billion-person community, if not more, and the reason we're being held back is that our gameplay is limited to HTML5. Current games are extremely limited by what HTML5 can deliver from a technical standpoint, and so they tend to be simple, hyper-casual type of games. Words with Friends is a perfect example of something that does really well on HTML5.

But if you want to reach more of the gaming audience, you have to deliver more advanced graphics and experiences, and that is the cloud platform. We don't own a phone manufacturing plant. We don't want to put out a game console. That's not what Facebook is about. Facebook wants to deliver entertainment to you instantly, connections to you instantly, community to you instantly. And if you put all those things together, you want to be able to deliver whatever type of game you want to deliver to the widest possible audience. This is the answer to that problem.

[At this point in the interview, Rubin starts playing Asphalt 9, a mobile driving game, on Facebook.]

Now I don't have to download this and can play as much as I want within Facebook. What's important is that it's free to play because we don't want to charge anyone anything. We can always go to the app store and download it and keep their progression and keep their purchases. We're not trying to replace app stores.

[Rubin returns to the game menu and in a few seconds is playing Golf Shootout.]

Notice how quickly I can switch games. App stores don't provide this. So there's a huge amount of consumer upside here. And that always translates to developer upside because they can put more games in front of people.

And I'm sure cloud also enhances the advertising offering.

Yes. We also offer cloud-playable ads. So imagine a world where you get a notification about your friend: "Jill just shot 4-under on this course." Or, better yet. "Jill is playing on Hole 2 right now. Would you like to play with Jill?" You say yes and now you and Jill are playing golf together live, right from your feed.

And it was an ad paid for, perhaps, by the golf company or it was a post made by your friend. Nobody else can deliver that. So we think this is revolutionary for games and are frustrated that we can't bring it to all gamers on all platforms and are being restricted from certain mobile platforms.

When you talk about frustration, obviously you mean Apple. Give me a little bit more texture about why you think it's unfair and how you think Apple may be treating games differently than other forms of content.

Apple treats games entirely differently from every other form of content. I can go into many ways.

I can't promote anything on iOS. I'm not allowed to have in-app purchases. And, by the way, if you play this golf game on our cloud platform on Android, we're giving the 30% to Google and the 70% to the developer. But we're giving Google the money. So this isn't a question of money we're talking about. I can't give Apple the money. They won't let me do that. So any game based on IAP — golf being one of them — I can't deliver because the developer can't make their money.

Next, it's a cloud game. I'm not allowed to have a cloud game inside Facebook. Oh, I can do it on the open web, great, but I can't point to that game from Facebook, so all of my discoverability is now out. Apple's rules are set up to make it so we don't know what we can deliver. We intend to find a way, but it's really, really hard.

How fully fledged is the business model at this point, in terms of things you're sure about versus areas where you think you might have to adjust?

Certain aspects of the business model are very easy to understand. We have a massive game advertising business. One of the hardest things for an advertisement or an advertiser to do is get you to leave Facebook, because you came there to see what your friends are doing, catch up on some news or whatever else, not to jump into an app store and download. So our ability to deliver game content right then and there without leaving the Facebook environment is really powerful.

So that part of the business is very easy to understand. The challenges that we might face are in places where we don't understand the ruleset in terms of what some of the platforms are restricting us from doing.

"If you want to reach more of the gaming audience, you have to deliver more advanced graphics and experiences, and that is the cloud platform," says Facebook's VP of Play, Jason Rubin.Photo: Facebook

So if you can turn up an interactive playable ad in the exact same form factor as a current static ad, how much more is that worth to the publisher?

Our belief is that it's instrumentally different. And by the way, the cost of building a cloud ad — even though they're far more complex and cool from a user's perspective — is a lot cheaper because it's just your game. You don't have to go build in HTML5 or do a video.

Let's get to what was required technically here. Facebook obviously runs one of the largest private clouds in the world, but I'm sure gaming presented fundamentally different challenges than what you've been doing over the last 15 years.

Totally different.

Just in terms of the technical requirements and latency and responsiveness and the basic data center provisioning side of this, where are you?

Right, so the biggest difference between the data centers that we had in the past and the data centers required to do this is that modern games use GPUs to push out their polygons, and if you try to run these games on CPUs, which we did originally because that was the easiest thing for us to get mocked up, the performance just isn't there. A beefy fan-driven GPU is where all the processing needs to happen to get the graphics fidelity of something like an Asphalt 9, and there's nothing else that Facebook had been doing in the past that really drove us to need those servers. Streaming video, for example, is a CPU-intensive task, not a GPU-intensive task.

So we've had to install these GPUs and their primary purpose is for cloud streaming games. That is the biggest change we've had to make.

Big publishers now are being bombarded by all kinds of different cloud gaming business models and opportunities. Everyone's got a different proposition, from Stadia or Luna to xCloud or Nvidia or Shadow or Sony. So they have the pick of the litter in terms of the models and distribution channels that work for them. How are you differentiating what you're offering to publishers and developers from all the other cloud offerings?

If you put all of the cloud streaming opportunities on a chart, we would be farthest away from all the rest of them in the sense that we're targeting free-to-play. We're not promising 4K or 60 frames a second. We don't have any premium titles at all. Many of our titles will be mobile. I just don't think the same developer is getting courted.

There's obviously crossover, but I think we're pretty far away from everybody else and so really the opportunity has taken some of the partners by surprise, like, "We thought everyone was going to be going after the AAA stuff, and here you are focusing on the mobile side." And the mobile side is bigger from a business standpoint.

Talk about the relationship with Microsoft and xCloud on Facebook.

So we will be running demos of xCloud games, but they will be running on their infrastructure so they're responsible for the quality, which will be awesome. They're figuring out how to do advertising to get people excited about things on Facebook like other developers are, it's just that those products are Microsoft Xbox products. It's a great opportunity for them to reach our users.

How aggressive will Facebook be in commissioning and developing your own original games for this platform, in addition to distributing content from others?

Well we did do that in VR, 100%, because nobody was going to take the flier. I'm not sure we do on Facebook Gaming.

One of the reasons we needed to seed things in VR is because it was going to take a long time to get to the massive user base. This product's the opposite. People are just going to stumble on cloud games in the Facebook app they already use, so this product can meet a massive user base overnight. And because of that massive audience, there is a reason for developers and publishers to do this.

On the new Player Names, it's seemed that for most of the company's history there has been an insistence on users using real names. Is this the first time that Facebook is allowing official alternate identities?

At one point Facebook made a real push to only use your real name, and with the LGBT community, specifically the transgender community, there were some issues with that. And I believe we rolled back policies in that space a few years ago.

Additionally, I think there are some countries, and I would point to Japan as one of them, where being your real self and being able to express yourself are not necessarily considered in the same way as they are in the West. And we've found that allowing people to use alternate names has increased their ability to share.

If you want to become friends with someone you meet in a game, your true identities will be revealed. Image: Facebook

But even when Facebook allows a pseudonym, there has not been the ability to officially switch identities or screen names on the platform. So this seems to be a different philosophy here in terms of leaning into multiple switchable personalities for different contexts rather than requiring one identity across all contexts.

Right. So now, my Player Name on Facebook is MadMac. Mac was a dog of our family that passed away a couple weeks ago. So MadMac is completely glued to Jason Rubin. If I misbehave, Facebook always knows that MadMac is Jason Rubin and anything that we can do to Jason Rubin can be done to MadMac. There is no anonymity, 100% not.

Now when it comes to true pseudonymity — which is to say, "Who else can know who I am?" — there are going to be different kinds of levels of that in different places but we're not really shooting for true pseudonymity, either.

We are hoping that if I want to play golf and golf is a game that decided it would put me in a course with a bunch of people I don't know, that I can be MadMac so that my real name doesn't show up there, but if I misbehave both Concrete [the game's developer] and Facebook know that MadMac and Jason Rubin misbehaved.

Now when you want to connect with fellow players in the game and you're playing as MadMac, when you connect with some other pseudonym and want to make friends, are your real identities on both sides mutually revealed at that point?

Yes exactly. If the two of us are playing in an open tournament in golf, you may not know who I am, but if I decide that I enjoy playing with you, and we decided to be friends, we are effectively choosing then to let each other know who we are. We're trying to encourage the best possible behavior, and this happens in gaming groups all the time.

And as this rolls around Facebook in various ways, there are really good reasons for safety to have this and for people to be able to express themselves and be involved in community. The key takeaway here is that true anonymity — i.e. I sign up for an account with a name that's completely unverified and I go harass people — is 100% not on the table here in any way.

So in order to make a Player Name, I have to have a real account first

Correct. And if you lie on your real account, you're in violation of policies, and we're aware of you from the beginning.

Tell me about the process: "How do we encourage positive behavior, hopefully, through how we design our identity policies?"

There are a lot of really good reasons to allow a very tight pseudonymity on a platform like Facebook. For example, let's say that I want to join an AA group. Gaming is just one of the places we're experimenting first because there is an even higher risk if you're talking about a drug addiction or a suicide hotline.

Gaming is the place to mess around with this because the stakes are lower.

If MadMac doesn't work out, and for some reason somewhere down the line we had to change policies, I'll be a lot less upset than if I was in a suicide hotline and something happens, right? There are some great places on Facebook to allow pseudonymity, for human health and for other things. We just have to get it right.