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Epic Sidesteps Apple To Reenter iOS Devices Through Nvidia's Cloud Gaming Service; Analysts Say Move Isn't 'Viable Business Alternative'

Benzinga logo Benzinga 1/14/2022 Shanthi Rexaline
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Epic Games' Fortnite, which was removed from Apple, Inc.'s (NASDAQ: AAPL) app store in August 2020, has managed to circumvent the restriction and reenter Apple's iOS-powered iPhone and iPads.

What Happened: Graphics chip giant Nvidia Corporation (NASDAQ: NVDA) announced that, starting next week, Fortnite on its GeForce Now cloud gaming service will launch in a limited-time closed beta for mobile, streamed through the Safari web browser on iOS and the GeForce Now Android app.

The beta is meant to test Nvidia's server capacity, graphics delivery and new touch controls performance. The company said, beginning Thursday, GeForce Now members can sign up to join the Fortnite limited-time closed beta for mobile devices.

Related Link: Making Sense of Apple's App Store Rule Tweaks: 'Cupertino Is One Step Ahead of Regulatory Curve'

Nvidia's GeForce Now service acts merely as a conduit for Epic's storefront, and in the process, Epic may not be required to pay any money from the in-game purchases players make on the new streamed version, the Verge reported.

For the unversed, Fortnite's ouster from App Store followed Epic's introduction of a direct payment option in the Fortnite app for iPhone and iPad to avoid the 30% commission Apple charges on each in-game purchase. The Fortnite game developer subsequently filed a lawsuit against Apple, alleging Cupertino engaged in restrictive practices in the App Store.

Analysts Attach Little Significance: Analysts have not placed much significance on this workaround by Epic.

"Such round-about way to bypass App Store restrictions and payment will not likely to materially challenge Apple's control over the App Store," Oppenheimer analyst Martin Yang said in a note.

The analyst sees too much of friction involved. A GeForce Now membership is needed to start with, with the free tier limited to one hour, the analyst noted. The Priority tier offers session lengths of up to six hours but would cost $9.99 per month, he added.

Related Link: Apple's Epic Loss Could Be A Game Changer For Spotify

Yang also expects compromise in performance. For a competitive shooter game, cloud streaming Fortnite at a potentially lower refresh rate will likely compromise player experience to various degrees, the analyst said.

"Epic Games' effort to bring Fortnite on iOS through cloud-streaming is more of a political gesture than a viable business alternative," Yang wrote in the note.

Other games are unlikely to follow similar strategy in the near term, he added.

Loup Funds analysts echoed similar sentiment.

"It's complex to sign up for GeForce and not a lot of people use game streaming services today and you have to play it in the safari browser which isn't going to be a great experience as of today," analyst Doug Clinton said.

Latest Ratings for NVDA

DateFirmActionFromTo
Nov 2021Deutsche BankMaintainsHold
Nov 2021Truist SecuritiesMaintainsBuy
Nov 2021NeedhamMaintainsBuy

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