Tuesday, July 28, 2009

The Emerging Competition over Streamed Video Games

It feels like we're on the cusp of a new industry - or at least an upheaval in an existing one. A battle is emerging among startups and established giants over streamed video games, one that I see as a precursor toward streamed computing.

The players are staking their claims. We have Onlive, whose approach centers around solving the growing problem for publishers that games are costing more and more money to make but profits ironically harder and harder to find. Onlive's approach also seems to value social interaction, with "spectating" and "brag clips" among their features. If technically and commercially viable, Onlive could usher in a console-less era for video games.

Then there's Gaikai, taking a browser-based approach, looking not so much to challenge console supremacy as to bring in new players to the market. By offering publishers a service, Gaikai proposes to give publishers flexibility to let newcomers try their games at little cost.

With over 100 employees, Onlive seems like a goliath compared to software company Otoy with only seven. But Otoy sports a strategic partnership with AMD to build "a new kind of supercomputer". AMD builds the massive graphics-crunching hardware, Otoy supplies the scalable graphics software, and the combination potentially affords another platform for distributing video games and PC applications, particularly those with intense graphics requirements.

Recently the company PlayCast launched a pilot in Israel, working with the cable network Hot to deploy streamed games on demand through cable set-top boxes. Streaming games/computing seem a natural extension for a cable company and could be yet another service they can provide, along with media distribution, Internet service, and telephony. I would think within five years most if not all the major cable providers will be active in this space, be it through their own development or through strategic partnerships with companies like PlayCast.

And then there's the cell phone providers and manufacturers. Companies like Verizon are already providing games-on-demand services, and manufacturers like Apple have shown that cell phone devices like the iPhone can prove a capable platform for video games. These efforts aren't exactly the "streaming" I have in mind when writing of companies like Onlive and Gaikai. Currently with Verizon's and Apple's services, users download complete games to their device (PC or cell phone) then play them through the processing power of the device. The streaming revolution will come when Verizon and others build their own server farms and wireless networks are fast enough to support latency-free streamed gaming directly to the cell phone.

Console makers Microsoft (XBox Live) and Nintendo (WiiWare) each offer a downloadable games service too, but again, users are downloading the games through the service to play through the processing power of the console. Sony is presently shunning suggestions to deploy a games-on-demand service, but they as well as Microsoft or Nintendo would be natural competitors (and logical participants?) should any decide to offer a streaming solution.

It is exciting to consider the number of different approaches being taken toward streamed video games, and to realize how many different companies, and different types of companies, can take a serious stake in the development of this new industry. As streamed video games become mainstream (within five years perhaps?) we will also have the solution (solutions?) for streamed computing in general.


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