Facebook is challenging Google and Apple for mobile gaming (FB, GOOG, GOOGL, AAPL)

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Facebook is enhancing Instant Games with two new features — live streaming and video chat — one year after the platform's launch.

Instant Games allows users to play HTML5 games within Messenger or on their News Feed without having to download the game or redirect from Facebook's properties. The live-streaming feature, which rolled out last Friday, uses Facebook Live to enable users to broadcast their game sessions on their profile. The upcoming video chat feature will let users video chat friends while playing games. There are 72 Instant Games on Messenger at the time of writing, up from 17 at launch in November 2016.

The updates will help Facebook’s longstanding effort to compete with Google and Apple as a platform that consumers use for a range of digital activities, from gaming to messaging to working. Here’s why Facebook’s efforts could work:

The additional features will make Instant Games more engaging, and keep users on Facebook longer. The new features encourage users to share with friends in fun, interactive ways while playing games. And integrating some of Facebook's features, such as Facebook Live, into Messenger will only strengthen Facebook’s ecosystem.

Google and Apple don’t have a platform-agnostic solution that can compete with the cross-platform interactive gaming offered by Instant Games. This means Facebook’s Instant Games can reach all consumers, regardless of whether they're within the iOS and Android ecosystem, as long as they have a Messenger account.
Facebook’s working on fixing its most significant disadvantage — a small selection of games — with the introduction of new popular mobile titles. Instant Games launched with 17 games, added 33 in the following six months, and has added an additional 22 in the six months since. The slowing growth of new games could be problematic, but Facebook’s offsetting it with the lure of popular titles and new monetization tools. Instant Games already has successful titles like Words With Friends and PAC-MAN, and is adding to that list; Facebook plans to add other popular games, such as Rovio Entertainment’s Angry Birds, to the Instant Games platform next year. In October, Facebook announced new tools to help developers monetize their Instant Games.

If Facebook can push its main app and Messenger as gaming platforms, it could pull users away from the iOS App Store and Google Play Store. The ability to download and launch apps within chat apps means users can bypass an app store, effectively turning chat apps into mobile operating systems. And that could present a threat to revenue generation for both the App Store and Google Play Store. Facebook is particularly well suited to succeed in this regard in emerging markets, where some consumers already see Facebook as synonymous with the internet, and phones are less likely to have enough storage to house a large number of apps.

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