Cloud gaming – what is it and what’s the impact of it?

By: Brent Decker

Recently, a group of my friends who know that I work in the gaming industry asked me if I was a “gamer.” When most people hear or use the word gamer, they picture a guy sitting at a computer in his basement playing for hours on end. It’s a stereotype of the industry that is quickly changing. Over the past month, the gaming industry has had the release of Grand Theft Auto VTM and Call of Duty®: Ghosts, both of which brought in over $1 billion in the first couple days. With a $60 price tag for each game, it means that over 15 million units were sold. Gaming is becoming more mainstream every day. To accommodate the increasing demand, the industry is looking at ways to move games into the cloud. But what is cloud gaming? More importantly, what does it mean to the consumer? I recently attended the Cloud Gaming 2013 conference in San Francisco to help answer those questions.

Buzz from the Cloud Gaming Conference
The conference was well-attended and included game publishers, developers, technology providers, agencies and consultants. What became evident very quickly was that everyone had their own unique view and definition on what “cloud gaming” is. Interestingly enough, there was one thing we could all agree on – it’s on its way. But it remains to be seen in what form and application it will be delivered.

What’s Cloud Gaming?
To most consumers and companies, “the cloud” refers to something that can be accessed via the web, as opposed to their local machine. The major benefit to consumers is that they can access their content anywhere an internet connection is available.

Google has made incredible strides in making apps and information sync seamlessly across devices. This has a natural application for the gaming industry as consumers want the ability to access their games any time and any place, including picking up right where they left off in their last game. For example, if a player is on level 76 of Candy Crush while playing on Facebook on their home PC, they may want to pick up at that level on their iPad. But is it that easy? Because Candy Crush is a mobile app the game code itself is relatively small, which makes it much more feasible to replicate across devices. When we’re talking about porting a big game like Call of Duty between your Xbox and iPad that’s a different story. Cloud gaming can be a feasible solution to this challenge. Instead of having the game directly downloaded on an iPad or using a disc in an Xbox, the game can be hosted by the publisher and consumers simply accesses it via the web.

But it gets even more complex. Even if a developer is able to create a game that is ubiquitous across multiple platforms, there are challenges to address with the “walled gardens” that restrict outside commerce. For example, let’s say Clash of Clans was able to create a seamless gameplay interaction between iOS and PlayStationNetwork (PSN). If you purchase in-game items (more barracks!) in iOS, that commerce transaction goes through Apple’s account system and they process the payment. But will the new barracks be there when you login to the game on PSN? You will need a backend account system that is flexible enough to work with multiple systems. Creating a universal experience that not only works, but is also provides a strong consumer experience is at the core of what we work on every day at Digital River.

Why is Cloud Gaming Important?
One interesting advantage of cloud gaming is that it can push updates to games instantly via the web without having to download a new version of the game. It creates a better user experience from that standpoint, but it doesn’t stop there. By having the ability to push patches to a game, it can be personalized much easier. Game developers could see data in real time, which tells them more about the behavior of their players and how they can in turn improve the game experience. One cool example is The Walking Dead game, which releases new “episodes” every couple of weeks. As each episode is released the data is analyzed and their teams make real-time decisions on how to improve the user experience. The next episode that comes out will be tailored to that data and will (in theory) be better than the last.

But wait, there’s more! The next evolution will include individualized versions of the game. You and I might play the exact same game, but the version I see and play is different than yours, based on previously known information such as gender, spending behavior, etc. While there are definitely concerns about how our online behavior is tracked and monitored, the reality seems to be that when done right it can be an experience that is better for the consumer and the company.

What’s Next for Cloud Gaming?
Much of the technology that will service this type of experience is still to be developed but there are already some companies making progress towards this vision. For example, GaiKai, a company purchased by Sony last year, provides pixel streaming of games so that the burden of processing graphics is taken off a local machine and instead the game is “streamed” from a server (think of it like watching a YouTube video, instead of downloading a video to your computer to watch it first). It’s a cool technology; but it’s still unclear how Sony plans to integrate it into the PlayStation or other hardware.

Services like GaiKai are going to become more common in our lives, and more often than not, you won’t know it’s there unless you are looking for it. Many of us are familiar with Netflix and their streaming video program, but did you know that their streaming videos account for 20-25% of all internet usage? Those videos take up a lot of bandwidth. This leads to one big question: Do the telecomm companies have an infrastructure that can handle all this new cloud-based entertainment? I think we will find out over the next couple years.

This holiday season will bring us the releases of both XboxOne and PlayStation® 4. Both of these new consoles will still be disc-based, but downloading games directly to these consoles will become much more common place. Many of us in the industry suspect that the next generation (five -seven years from now) will be solely cloud-based and the days of physical discs will be gone. If that happens, the industry will be forced to adopt new business models and games that will presumably (and hopefully) be even more exciting for all the gamers out there.

Which brings me back to the question my friends asked me: am I a gamer? I think it is safe to say that if you played any of the games that I have mentioned in this article, even the mobile games, then you are a gamer. So yes, I am a gamer….are you?

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