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Does Gaikai herald another change in Internet infrastructure?

By on July 10, 2009
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Gaikai claims to offer near-instantaneous gameplay of high-end games on low-end consumer hardware. Is this trend going to spell the end of the Content Delivery Networks?

In the early days of the Internet, bandwidth was limited. As web pages changed from being primarily text-based to carrying images and other media files, load times increased until the user experience became unbearably bad.

The solution for many was to provide local servers close to all the major population centres. Companies such as Akamai mirrored popular sites which reduced the delay in asking for lots of separate files (images, text, ads and so on.)

Recently, however, the trend has been for bandwidth-hungry websites to need to send one big file, not lots of little ones. If you are streaming a video or downloading a game, you only need one file, but you want it to come down the fattest pipe you can find.

Enter the Content Delivery Networks (CDNs).

CDNs, such as Limelight Networks, have a small number of datacentres but these are wired up with some of the fattest pipes in the Internet today. It may take a long time (in Internet latency terms) for the request to stream Shrek 2 to reach their datacentre, but once the file starts coming down, it’s blisteringly fast.

But Gaikai suggests that they need to reverse the trend towards centralisation and have more points of presence. “OnLive says it’ll have five datacentres… Our strategy is to go much, much more denser than that,” Perry told Eurogamer. “We’re going to be constantly adding datacentres.”

So if Gaikai (and services like it) take off, the priority will not be to have vast datacentres in the Nevada desert. It will be to have small server-farms located near population centres.

It’s like 2000 all over again.

Gaikai screenshot

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com
  • I agree that without content, OnLIve and Gaikai will struggle. In fact, I argued that the only way OnLive could succeed was to invest billions in exclusive content, in much the same way that Sky invested massively in exclusive access to live football to launch its satellite service. (http://www.gamesbrief.com/2009/04/onlive-has-on…)

    Gaikai is hinting that it's initial approach will be different: you won't visit a single branded Gaikai channel; instead, you might play Mario Kart on http://www.nintendo.com and Call of Duty at Activision.com. It's not a new marketing/sales channelf for publishers (depending on whether they choose to monetize it).

    I tend to agree with your analysis, but at least Gaikai sounds as if it is trying to avoid the chicken/egg scenario of not enough games = not enough users = not enough publishers willing to allow Gaikai to offer their games.

  • Two issues spring to mind. A lot of developers in the game industry are still having the conversation as to do these systems actually work or not and it’s a valid argument (I believe the technology does work) but less important to answering the question of how is it going to change and effect the distribution of the video games industry and I actually think not a lot.
    The question is all about what games will service like On Live and Akamai deliver or maybe importantly be allowed to deliver. Since these services are only delivery networks they will have to partner with the major publishers to get content.
    I cannot see these publishers doing deals with OnLive or other services to launch their latest highest profile game content as it will affect the sales of their still lucrative retail distribution networks. So what will happen at best is that the publishers will put some sort of time based exclusivity on games content in the sense that you will only be able to play games on OnLive that are older than oh let’s say 2 years but potentially only back catalogue games that are 3 or more years older. This will allow them to long tail their older underperforming games but will not compromise the retail sales of their new titles.
    The other side of this is that each of these services will have to do deals with multiple publishers. I can’t see most publishers doing distribution deals with multiple services or in fact doing deals that allow their titles to sit equally beside competing titles from other publishers. So as a publisher they will want to do exclusive deals so you could only get GTA 2 on OnLive but not on Akamai etc.
    You will also have to factor in that some publishers like Nintendo will not want to saturate their brand on a third party service so you won’t be seeing any of their games. You’re also not going to see many MMOG’s on these services as they already have their own distribution networks so don’t expect to be playing Mario Cart, Metroid or World of Warcraft anytime soon. Many publishers will also not want to put out their console titles as they already have digital distribution and backwards compatibility for their titles and consoles.
    So were really going to see less games, primarily PC games and old back catalogue titles fill up these services and that to my mind is a pretty pants service for gamers.
    Let’s not forget GameTap http://www.gametap.com/ who tried this exact business model a few years ago and it hasn’t changed or revolutionised the games industry in any way.
    These services are essentially trying to become the Apple and iTunes of games distribution. However people quickly forget that before iTunes Apple had already revolutionised the distribution of digital music by inventing the iPod and only when the user base for that was sufficient only then did they have the marketing clout to negotiate deals with all the major music labels to get their entire catalogue of music onto iTunes.
    Without the marketing gateway drug of iPods services like OnLive are really only offering a new distribution channel untested in the market and that to my mind is not a compelling enough reason for any publisher to part with its entire catalogue of games content. If OnLive had millions of users (lets use the iPod analogy again) then there is a strong reason for publishers to give those users games without those users a publisher is only going to try out these services a little.

  • I agree that without content, OnLIve and Gaikai will struggle. In fact, I argued that the only way OnLive could succeed was to invest billions in exclusive content, in much the same way that Sky invested massively in exclusive access to live football to launch its satellite service. (http://www.gamesbrief.com/2009/04/onlive-has-on…)

    Gaikai is hinting that it's initial approach will be different: you won't visit a single branded Gaikai channel; instead, you might play Mario Kart on http://www.nintendo.com and Call of Duty at Activision.com. It's not a new marketing/sales channelf for publishers (depending on whether they choose to monetize it).

    I tend to agree with your analysis, but at least Gaikai sounds as if it is trying to avoid the chicken/egg scenario of not enough games = not enough users = not enough publishers willing to allow Gaikai to offer their games.

  • Two issues spring to mind. A lot of developers in the game industry are still having the conversation as to do these systems actually work or not and it’s a valid argument (I believe the technology does work) but less important to answering the question of how is it going to change and effect the distribution of the video games industry and I actually think not a lot.
    The question is all about what games will service like On Live and Akamai deliver or maybe importantly be allowed to deliver. Since these services are only delivery networks they will have to partner with the major publishers to get content.
    I cannot see these publishers doing deals with OnLive or other services to launch their latest highest profile game content as it will affect the sales of their still lucrative retail distribution networks. So what will happen at best is that the publishers will put some sort of time based exclusivity on games content in the sense that you will only be able to play games on OnLive that are older than oh let’s say 2 years but potentially only back catalogue games that are 3 or more years older. This will allow them to long tail their older underperforming games but will not compromise the retail sales of their new titles.
    The other side of this is that each of these services will have to do deals with multiple publishers. I can’t see most publishers doing distribution deals with multiple services or in fact doing deals that allow their titles to sit equally beside competing titles from other publishers. So as a publisher they will want to do exclusive deals so you could only get GTA 2 on OnLive but not on Akamai etc.
    You will also have to factor in that some publishers like Nintendo will not want to saturate their brand on a third party service so you won’t be seeing any of their games. You’re also not going to see many MMOG’s on these services as they already have their own distribution networks so don’t expect to be playing Mario Cart, Metroid or World of Warcraft anytime soon. Many publishers will also not want to put out their console titles as they already have digital distribution and backwards compatibility for their titles and consoles.
    So were really going to see less games, primarily PC games and old back catalogue titles fill up these services and that to my mind is a pretty pants service for gamers.
    Let’s not forget GameTap http://www.gametap.com/ who tried this exact business model a few years ago and it hasn’t changed or revolutionised the games industry in any way.
    These services are essentially trying to become the Apple and iTunes of games distribution. However people quickly forget that before iTunes Apple had already revolutionised the distribution of digital music by inventing the iPod and only when the user base for that was sufficient only then did they have the marketing clout to negotiate deals with all the major music labels to get their entire catalogue of music onto iTunes.
    Without the marketing gateway drug of iPods services like OnLive are really only offering a new distribution channel untested in the market and that to my mind is not a compelling enough reason for any publisher to part with its entire catalogue of games content. If OnLive had millions of users (lets use the iPod analogy again) then there is a strong reason for publishers to give those users games without those users a publisher is only going to try out these services a little.