Edward Tessen Tanaka
Jul 6, 2012

Cloud games and the future of streaming content

Sony's recent acquisition of Gaikai is the latest in a series of moves intended to bolster the company's profitability.Earlier this week, Sony announced its acquisition of California-based video game streaming company Gaikai for $380 million, a move that the Japanese company says is aimed at "establish[ing] a new cloud service" for its users.

This strategic move, which seems to be about the rise of cloud-based games, is actually more indicative of the importance of streaming content and its impact on both gaming software designers and device hardware manufacturers. Picture a world where Netflix offers an unlimited library of games that can be played on any device using a "universal" Android remote control. Or where flatscreen television manufacturers - like Philips Electronics - offer their own game portals which can be used without having to purchase a dedicated game console. The possibilities seem endless and, while competition is often considered desirable as it can lower prices and increase choices, in this case, there are numerous industry stakeholders who have their own vision of how this should come to pass.

Unfortunately, these stakeholders, while publicly focusing their efforts on attacking performance issues that arise when streaming high bandwidth games, are in reality marching towards an all-out war for control of a platform that permits them to stream any type of content. After blundering badly by permitting Apple -- a hardware manufacturer -- to create its own content ecosystem which can conveniently only be accessed using its own devices, no one in the content and/or hardware space is going to make the same mistake again.

Because of what is at stake, the next several years will be packed with numerous acquisitions, alliances, partnerships, and mercy killings all in the name of -- at least publicly -- consumer choice. While this may sound noble, it also means that many users -- and corporations -- are going to be badly burned by incompatible technologies until the dust has settled.

Fortunately for consumers, there are technical considerations and complexities, especially with streaming games, that needed to be addressed in the interim. This means that while watching the fireworks, they can study and research which solution fits their lifestyle and content needs (gaming and otherwise). However, once these technical issues have been resolved (or worked around) in the gaming space, the same architecture (in theory) can be used agnostically with all forms of content. This means that this fight is really about creating a cloud-based architecture that is content agnostic and can stream games just as easily as business applications and high definition movies.

As they say, let the games begin.

Gaikai's platform provides access to PC games from top developers like EA, Ubisoft and THQ through a Java-based browser. Users can also play free demos of games without the large downloads usually required to do so. The company already offers games via its Facebook application and has partnerships with both LG and Samsung to include its services on their smart televisions, although those partnerships may be affected by the acquisition.Electronic Arts executive vice president Frank Gibeau.

Sony is only one company joining the growing trend of shifting toward streaming and cloud-based technologies. Frank Gibeau, President of EA Games, recently told GamesIndustry International that EA is "going to be a 100 percent digital company, period. It's going to be there some day. It's inevitable." While only a quarter of EA's total revenue in 2011 came from online sales, those revenues increased by 47 percent last year and are expected to make up 40 percent of total revenues this year.

While the idea of buying and streaming a game without ever having to leave home sounds appealing, consumers have been slower to switch to streaming video games than movies and music because of the issues that come up when dealing with so much content. Slow download speeds, less impressive graphics, and lagging during gameplay are some of the most commonly cited reasons that people hesitate to switch to streaming video games.

Visual computing technology company NVIDIA, which developed the "world's first virtualized GPU," recently unveiled a system that may tackle some of these issues. In May, NVIDIA announced that it has developed a way to power cloud services with its GPUs, which allows users to play games on any device without having to actually download the game themselves. With its new graphics processors (that have triple the performance-per-watt) and the new GeForce GRID platform, the company plans to offer a way for consumers "to stream high-quality games with latencies low enough to make the game seem as though it's running locally," minus the console of course.

Further demonstrating its faith in the future of streaming video games and, perhaps, content in general, NVIDIA announced a partnership with Nyko last month to create Bluetooth-enabled controllers for Android tablets. The PlayPad and PlayPad Pro, which resemble the Xbox 360 controller both in terms of aesthetics and capabilities, will also be backwards compatible with other Android games and will be optimized to run on NVIDIA's Tegra 3 chipset.

While these companies seem to be focusing their efforts on streaming cloud-based games, in reality this race is about creating platforms - technologically unspecified and/or proprietary - that centralize a customer's content and place parameters around accessibility. The next few years are going to be a hell of a ride, but at the same time, a window of opportunity - not only for those who play games or ingest content, but also for companies looking to be acquired as part of a strategy that ensures survival and financial enrichment. Not surprisingly, technical superiority is not the only factor that matters in resolving this issue. The gaming market can -- and may -- turn out much like our modern automotive market: numerous alliances and products that are reflective of different price points strategies, technologies, and lifestyles.