FEATURE: Heads in the cloud

Cloud gaming is on the horizon – but what does it mean for the industry? Top bosses frompublishing and retail forecast what trends we can expect to see as the technology catches on…

The following is extracted from a a new report looking at the viability of cloud gaming from the organisers of Cloud Gaming USA. Click here to register for the free reportfrom Cloud Gaming USA.

How do you hope to monetise cloud games?Is the traditional retail model suitable, or should companies look at episodic games, micro-transactions and so on?

Richard Hilleman, Electronic Arts: Our current experience is that the App Store model is essentially in freefall. That increasingly people in that context need to pay in-game versus out of the game. The good news is that our experience with DLC has been that if we do those strategies successfully, that we get payment rates that are far superior to almost everybody else in the online commerce space.

Tony Bartel, GameStop: I define cloud gaming as anything that is distributed digitally and enhances the gaming experience — whether that’s a full game download or the sale of DLC. What you’re going to see in a cloud gaming world is first DLC, which is easily monetisable. It’s already a multi-billion dollar business. We see DLC growing from a $3bn global category today, to a $6.4bn category by 2014. That’s a 24 per cent per annum growth rate. That’s a very attractive category to grow in.

Do you see core games coming to tablets and mobile devices in the next few years? Is this something publishers should be excited about?

Brian Farrell, THQ: There are already a lot of games on tablets and mobile devices built with hardcore gamers in mind, and that trend is only going to grow. One of the most exciting things about the increasing capability of mobile devices is how we can build out a digital ecosystem, delivering core games that extend the experiences with associated console or PC games. The performance of mobile devices is increasing at an exponential rate and over the next five years they will become comparable in capabilities to your home consoles, and that’s an incredibly exciting frontier for THQ and other publishers.

Perry: It turns out every TV, every Blu-ray player, and every tablet that’s made today has a video decoder chip in it is ready for cloud gaming. The device becomes a window on a server somewhere else doing much more powerful things than anyone would want to buy. So you can buy a $1,000 TV but make use of a $2,000 computer elsewhere – all that takes is a video decoder chip.

Bartel: Based on what we have seen so far, we are excited about the potential these tablets have and really don’t feel like we’re going to need to create our own tablet. Our plan is to create a small subset of tablets that will be the Alienware of tablets, if you will. They will be optimised tablets for gaming that will have either wired or wireless controllers. Gamers will be able to unlock themselves from the form factor of just having an accelerometer and a touch-pad, which significantly increases the complexity options of the games.

Demand for online games can be very unpredictable. Core games are much more resource intensive than casual games. Is this unpredictability and potential costs a concern when planning your move towards the cloud?

Farrell: When launching an online game, publishers predict the number of players they’ll need to support over time and then plan accordingly. Ideally, we could launch a game with a base level of supported players and have the ability to rapidly scale that up or down to suit demand.One of the huge benefits of cloud computing is the ability to quickly start up new servers or shutdown under-used ones, meaning publishers only pay for what they use. Traditionally, starting up new servers can be time-consuming, expensive and slow so cloud computing holds huge promise in overcoming some of those challenges.

Hilleman: I don’t think core gaming online is always more demanding. The number of users per server for a game like Battlefield is pretty comparable to those of casual games. The difference is core games really are very thick client games. They really demand a lot out of the consoles or the PCs that they’re running on.The question is whether it’s a thin client [basic game] or a thick client [complex game] project. We think the efficiencies that underlie those systems are a continuous source of innovation that we have to work on. If you take the size of these systems, modest amounts of money become large amounts with small changes in those infrastructures. We’re going to pursue efficiencies because they’re very easy to realise.

Bartel: One of the reasons we bought Spawn Labs is it allows us to start from the ground up and develop tech around our PowerUp Rewards system [GameStop’s customer reward card]. We know exactly what games people have and which games they are going to be playing. We know where they live, what the demand is, and who is going to be playing those games. We know who has reserved a game. This will allow us to invest behind demand. We can scale by adding machines to offer customers a one-at-a-time experience when they’re streaming from the cloud.

This report was compiled by Cloud Gaming USA. A new event for the cloud gaming sector that takes place in San Jose, USA on Wednesday, September 7th and Thursday, September 8th. http://www.cgconfusa.com/