Snap is taking on Apple in the multi-billion dollar mobile gaming business

Key Points
  • Snap announced a new ad-supported gaming platform at an event Thursday, following Apple and Google into the gaming space.
  • Snap's gaming business model stands in contrast to Apple's which will be based on a subscription.
  • Free-to-play games like "Fortnite" and "Apex Legends" are already popular with Snap's younger audience.
Evan Spiegel, CEO and co-founder of Snap Inc.
Adam Galica | CNBC

Snap announced a new ad-supported gaming platform Thursday, joining Google and Apple in a quest to grab attention and dollars from the multi-billion gaming industry.

Snap announced six new original and third-party games that will begin rolling out on its flagship Snapchat app Thursday. The feature is a way for Snap to entice its Gen Z audience in a new way as other free-to-play games like Epic Game's "Fortnite" and EA's "Apex Legends" continue to capture teens' interest and time. Shares of Snap were up 1.1 percent following its series of announcements at the Snap Partner Summit Thursday.

Snap is betting that engagement with games will also lure more advertising dollars to its platform with non-skippable, six second video ads. Analysts were still skeptical about the company's ability to maintain its user base even after posting better than expected earnings with stabilizing user engagement in its fourth quarter 2018. Snap's stock is down about 23 percent over the past 12 months, but has seen a significant rally over the past six months, rising 45 percent to trade around $11.28 on Thursday.

Snap's advertising model stands in contrast to the subscription gaming service Apple plans to launch this fall. Apple Arcade will feature over 100 games exclusively on Apple devices, the company announced at a media event last month, though it has yet to name a price for the bundle.

Google has also gotten into the gaming space, announcing last month it will launch a new streaming service called Stadia this year, which will let users play high quality games without expensive gaming consoles or computers. But like Apple, Google has yet to name a price for the service.

Snapchat users will be able to access games directly from the chat feature of the app and invite friends to join them. In prepared remarks for Thursday's announcement, Snap Director of Product Will Wu said the company wanted to create a gaming platform that made it easier to play games with friends on mobile.

"We wanted to build something that makes us feel like we're playing a board game with family over a long holiday weekend," Wu said. While there are several steps involved in getting a group of friends to join a game together on a separate app, Wu said Snapchat's existing platform gives it "the right ingredients to break down these barriers."

The first of Snap's games to launch will be Bitmoji Party, an original game that lets users compete as their Bitmoji avatars, which are cartoon-like characters designed by users. Snap will soon roll out its third-party games as well, including two battle-royale games, the same style as "Apex Legends" and "Fortnite."

In addition to Snap Games, the company announced several other new features at its event Thursday. Snap will also introduce "app stories" that let third-party apps like Tinder, HouseParty and AdvertureAide allow their users to create custom stories through the Snapchat app. It also plans to launch a new lineup of original shows and a new augmented reality feature.

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Watch: Google announces new game streaming service called Stadia

Google announces new game streaming service called Stadia
Google announces new game streaming service called Stadia