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Lazard: Games have "critical significance" for Google

Thu 12 Aug 2010 8:33am GMT / 4:33am EDT / 1:33am PDT
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Analyst claims major fightback against Facebook is coming, plus Android Market will eclipse App Store

Lazard Capital Markets analyst Colin Sebastian has claimed that Google's game push is imminent, following his attendance of a private 'Think Gaming' summit.

In a note released to investors following the conference, he claimed that "games have gained critical significance within Google." One of the reasons for this, he said, was to help push its Android mobile operating system.

"We anticipate that the Android Market could over time eclipse the App Store, as eventually the sheer numbers of the market will pull developers to the platform," he said.

He also felt that Google would try to reinvent its slumbering Paypal rival Checkout for gaming purchases.

If reports that Google this week acquired microtransaction specialist Jambool are true (the company has so far declined to comment), this could be a hint of its plans in that area.

He also felt that the Chrome Web Store, due for release later this year, would be "the analog of the iOS App Store (and Android Market) for web browsers."

Previews of the Web store have revealed gaming partnerships with the likes of Popcap, LucasArts and Unity allowing a variety of relatively high-end games that run within the browser.

Sebastian felt that "Incorporating Google Checkout in the Chrome Web Store could accelerate online game adoption by improving game discovery; a central part of the App Store's success is attributable to the centralized nature of the store."

Much of this may be dependent on the success of Chrome as a browser. It is currently growing quickly, now claiming over 7 per cent of the market up from 3 per cent in September, according to Netmarketshare.

Also due later this year is Chrome OS, which will come pre-installed on approved hardware. As the browser is its base, the Web Store would form a fundamental part of any notebooks or tablets using the web-based operating system.

However, Sebastian felt that Facebook was a major target for Google, claiming data suggested 40 per cent of time on the social network was spent gaming.

"As Facebook increasingly looms large as a legitimate competitor to Google, and as social games become a bigger part of the market for online content (e.g., DIS acquisition of Playdom), we believe the focus on games is regarded as a strategic necessity.

"Given Facebook's rapid rise as a display ad network (the biggest ad opportunity that Google is targeting), its launch of a search style service (Facebook Answers), and its walled-off content (not crawlable by Google), we are not surprised at the strategic focus on gaming, which could potentially undermine Facebook," he said.

Sebastian claimed that much of what he'd seen at the summit was under wraps meaning recent speculation about a 'Google Games' service remains just that for now.

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