Depending on who you talk to or which study you read, the average person spends anywhere from four to six hours a day watching television. No doubt, there are many gamers whose playing habits rival or even exceed those figures, but those people belong to a small, dedicated niche found at the very fringes of the "core" audience. They are hours burned away in front of online shooters and PC MMOs - the colateral of the few.
Television is different. The 28 hours the average British person spends watching TV each week is more inclusive, and the same goes for the 36 invested by the average American. Unlike gaming, there isn't a small clutch of demographics cheerfully bolstering the figures while the vast majority of the rest dabble for 20 or 30 minutes at a time. Watching hour upon hour of television spans age, gender and social background in a way that playing games has never come close to rivalling.
While games are on every phone and every browser, in the living room they remain a secondary concern. For companies like OnLive, Gaikai, PlayJam and TransGaming, this is the final obstacle standing between the industry and true mainstream penetration, and the proliferation of internet-connected and Smart TVs present the best opportunity to finally achieve that goal.
Of those companies, OnLive is arguably the most progressive. First announced at GDC in 2009, the company's promise of AAA games streamed from the cloud made hardware specs obsolete and signalled the end of console gaming as we know it. It was also greeted by a chorus of dissenting voices and raised eyebrows, understandably wary of such a lofty claim and its disruptive implications.
More than two years later and OnLive has already been operational in the US for nearly 15 months, and on September 22 it will receive an official UK launch. The critics may not have been silenced altogether but OnLive is gathering momentum, and that will only increase by the end of the year, when the company's deals with Vizio and Intel result in the first OnLive-integrated Smart TVs and Blu-ray players hitting the market.
Core gaming, up untill now, has been a pretty planned experience... There's not that Netflix experience. With OnLive, there is
Steve Perlman, OnLive
"OnLive certainly is important to the game space for making it so you don't need a console in order to enjoy a game on your TV," says founder and CEO Steve Perlman. "And then the most obvious place to put it is in the TV, and not in a separate box."
According to Perlman, OnLive's cloud-based service provides manufacturers with a powerful tool to address a problem unique to connected and Smart TVs: obsolescence.
"When all that TVs were doing was playing back video, the only obsolescence you might have is going from standard definition to high definition - which happens, what, once every fifty years? TVs had a very, very long life," he says.
But the hardware on any given Smart TV is more complex, and its relative performance can be measured in a greater number of ways. Even a company making apps for a single manufacturer might have to consider several models, all with different specifications.
"They might have a feature they want to do and they find that nothing more than one or two years old can run it," Perlman adds. "So in walks OnLive: we work on every TV, we add no cost to the TV, and anybody who wants to develop an application can now develop that application in the cloud and it works perfectly."
On a number of occasions during our interview, Perlman mentions the "TAM." This stands for "total addressable market," and Smart TVs stand to improve OnLive's by several orders of magnitude - if Perlman's projections are accurate, around the service could theoretically reach 75 million people by the end of this year alone.
"It's the same thing that happened to Netflix - in the United States, you can't buy a TV or Blu-ray player that doesn't have Netflix," he says.
"Netflix has got, what, 28 million users now? Those users didn't come just because they have a set-top box or PC or Mac; they came because Netflix is everywhere, and because people who felt like watching a movie just found that it was there. It was the casual usage of streaming media."
"Core gaming, up till now, has been a pretty planned experience: you've got to fire up the console or PC, put in the disc, load up the game you've been playing. There's no, 'I heard about this interesting game, I think I'll try the first five minutes and see if it interests me.' There's not that Netflix experience. With OnLive, there is."
Perlman insists that, with an OnLive-enabled Smart TV, the transition from watching television to playing a game will be "as easy as changing channel," but even if that does prove to be the reality his comparison to the success of Netflix strikes a false note.
If OnLive is positioning itself as a service for AAA core games, its total addressable market is people interested in that product, and not necessarily anyone with access to OnLive. The rapid growth of Netflix may be attributable in part to the ubiquity of the service, but it also had a far larger audience of interested consumers than the average blockbuster game. With Netflix, the scale was already out there in the form of people who watch movies; it just found a more efficient and consumer-friendly way to harness it.
Indeed, discussion of OnLive's audience is the only area that Perlman is anything less than totally convincing: core gamers who need a new television and think, 'why not?'; people that are already using OnLive on PC and see it as an extra convenience; casual players attracted by its spectator and group chat features. All could prove to be strong niches, but they don't approach the reach of Smart TV.
Of course, Smart TVs are just one device where OnLive's users can access the service - PC, Mac, iPad and Android-based tablets are also supported, with smartphone integration on the way - but the focus on core games also puts it in direct competition with consoles in the affections of its target audience. However, Perlman doesn't see why OnLive needs to be an either/or proposition for console gamers.
Smart TV is not only a very important part of our strategy, it's just widened our reach, and it's something the publishers will want
David Perry, Gaikai
"It's going to be an evolutionary process," he concedes. "I don't know of any console gamer who has a problem with getting a demo of a game instantly rather than downloading it first. I mean, the early Xbox 360s only had 20 GB drives... So we're finding that there are certain activities that core gamers are certainly going to like on OnLive."
"As far as when console gamers decide to move over to OnLive, and have it be their primary device, well, it will happen when it happens."
Exactly when console gamers see a service like OnLive as a valid alternative to their consoles - as opposed to an occasional additive - might be a more important question than Perlman's relaxed attitude suggests. Certainly, OnLive's most prominent potential rival, Gaikai, has adopted a more reserved model that allows it to deal only with publishers.
Rather than creating a Steam-style marketplace where games are purchased by consumers, Gaikai simply offers its technology as a way of supporting instant, streamed game demos. If a user wants to buy the game as a result of playing the demo, they will click through to the relevant publisher's online shop. Gaikai's revenue is generated from deals with the the publishers, depending on the number of minutes users spend streaming content with its technology.
Obviously, this makes Gaikai an easier pitch than OnLive, which takes a cut of the revenue from each game it sells, but crucially it also creates some distance between the company and the buying habits of the consumer. In the future, Gaikai's technology could be used to stream entire games, but its reticence to use it for that purpose now is telling.
Nevertheless, CEO David Perry is watching the emergence of Smart TV with great interest, and the fact that Gaikai streams through a browser means that it doesn't even need to form partnerships with manufacturers. OnLive has to put a chip inside the television; Gaikai just needs to be compatible with its operating system.
"Ultimately, yes, Smart TVs being able to play the latest, greatest games is not only a very important part of our strategy, it's just widened our reach, and it's something the publishers will want," he says.
"But we do believe that as time goes on, you've got to remember that Moore's law is in our favour... The efficiencies of the machines just keep getting better and better, and there's a lot of energy going in to saving electricity, and so the cost of hosting keeps going down."
"It's all going in the right direction for us... Even if Gaikai did nothing at all the Intels and the Nvidias and everyone else out there, the motherboard makers, everybody is working on how to bring the power costs down. If we just let them do their jobs they'll make our business more efficient over time."
For both Gaikai and OnLive, the ability to play games natively through a television is just one strand of a service that encompasses numerous devices. For companies like PlayJam, however, it is the aim of the entire business, and this narrow focus affords a different perspective on what a Smart TV games service needs to offer.
In fact, PlayJam has been making and distributing games for televisions since 2000, when it launched an interactive service through cable operators like Sky. The company has strong existing relationships with hardware manufacturers, and systems for safely delivering and monetising games developed over the course of ten years. With a space as young as Smart TV these competencies are both rare and valuable, and the PlayJam games app is already available through all LG and Samsung televisions.
For PlayJam's COO Stuart Walsh, to focus on core games is to ignore both the size and the composition of the Smart TV audience. Any piece of hardware that new and that expensive is certain to be the principal television in the household, and consoles often don't take pride of place beneath the living room TV - the content of the service should reflect that.
"If you take a high-end console game, that's a very deep, immersive experience, with one person engaging at a time, and the percentage of people playing those games is much smaller - it's more of a niche," he says.
"If you look at the most popular games on Facebook, they're played by 95 per cent of the rest of people, who like simple, casual games. But you still play them on your PC, on your own, so it's not a very social thing at all... And then you look at Smart TV, and it's not a high end PC, it's not a console - it's a reasonably capable device that you can play those types of games on. So I think if you can put those types of games in the living room they have to have a more social aspect to them. There's a proven demand for that type of content, and it suits the device perfectly."
If you take a high-end console game... the percentage of people playing those games is much smaller - it's more of a niche
Staurt Walsh, PlayJam
From delivery method to pricing to the type of games it carries, the differences between the services offered by PlayJam and OnLive are legion. However, the most important difference is also the most fundamental: Walsh looks at PlayJam as a television experience, and not a gaming experience.
The overwhelming majority of Smart TV owners will be bringing years of learned behaviour regarding television use with them; far more than will bring learned behaviour regarding, say, online shooters.
"Is Smart TV a viable platform to consume [AAA] games on? With the right controller and things like that, yeah, absolutely. But, again, we look at it very much as a TV business, so we look at the audience profile and consider what percentage would want to pay for and consume that type of content via their TV... and it's a minority of the TV audience."
"Within that space the battle is between OnLive and console. I don't think we have too much concern with OnLive's proposition in terms of audience share, but it's a question of whether there's a demand for that from the people that play those deep, immersive games, and whether the technology can deliver the experience, and that's yet to be proven."
"TV is a different experience. It's a lean-back experience; the user wants to be presented with options. So we look at the way we deliver that as more of an EPG [Electronic Programme Guide] for games; it's editorially driven, it's changing every day, you're surfacing and promoting different content every day."
This view is clearly echoed by Vikas Gupta, CEO of TransGaming, another company intent on developing Smart TV as a gaming platform with its new service, GameTree TV. Like PlayJam, it has considered the sheer size and demographic variety of its potential audience and decided that the most promising strategy is to stay within "a television-based paradigm."
"In talking to consumers and conducting a lot of focus testing, what people are telling us is that living room entertainment is still the most relaxing form of entertainment consumption," he says. "So what we're really driving at is building an entertainment experience that caters to what the living room has always been about."
"We're building GameTree TV to offer interactive entertainment as a service that's complementary to television viewing. So the market audience we're going after isn't necessarily the gaming audience, because we believe that gamers are already highly over-served. Rather, we're going for the mainstream television audience that's looking for enhanced capabilities."
TransGaming's commitment to using television as a template for GameTree TV is total: the company's Atlanta office is almost entirely populated by former staff from Turner Broadcasting, including Blake Lewin, who launched the online game service, GameTap. Gupta believes that his team's experience at Turner Broadcasting taught them the value of programming a service to keep it fresh and inviting to the audience, which will help GameTree TV to blend seamlessly into existing viewing habits.
As such, the games are largely "snackable" experiences that can that can deliver a satisfying experience regardless of the user's available time - the version of GameTree TV we were shown had Plants Vs. Zombies, Osmos, World Of Goo, and a range of other games that displayed the same mix of casual gameplay and skilful design. At first, the service will be programmed with "mums, tweens and children" in mind, before moving on to fathers and young-adult males.
"Always being very careful that we don't look like we're competing with the consoles or high-end PCs," adds Gupta.
However, while PlayJam had a long history of developing and distributing casual games to a mainstream TV audience, TransGaming had no such incentive to create its service in a similar mould. GameTree TV won't launch with AAA games and it won't stream content from the cloud, and Gupta is very clear about the reasoning behind those choices.
"Because we know, with 100 per cent certainty, that we can deliver a great experience," he says. "We recognise that what we build today has to cater to what's available today."
The fact of the matter is that not every jurisdiction in the world has outstanding bandwidth, and we simply cannot deliver a sub-par experience to the consumer
Vikas Gupta, TransGaming
"We're taking a pragmatic approach in the sense that we'll continue to evolve GameTree TV based on the evolution of technology as well as standards across the world. The fact of the matter is that not every jurisdiction in the world has outstanding bandwidth, and we simply cannot deliver a sub-par experience to the consumer when we know there are going to be bandwidth restrictions in place."
"That's why, today, the download model works very well. Until both the technology and bandwidth caps catch up, and we know we can guarantee a high-quality consumer experience, I don't think [streaming] makes sense. Then what we're doing is trying to deliver to the consumer a pipe dream. Maybe it works well, maybe it doesn't, but we can't guarantee that service. We just don't operate that way."
Another problem with AAA games on Smart TV is pricing. Gupta acknowledges that consumer behaviour is changing, but right now the largest amount that the TV audience is used to spending on a single transaction is a few dollars for video-on-demand. GameTree TV can offer unlimited access to its portfolio for an affordable monthly fee - similar to Netflix. But while OnLive has a narrow selection of games under a subscription service, for the most part it will have to run with more conventional retail price-points.
"I don't believe that sitting in your living room as a family that anybody is going to be willing to spend $60 the way people do on console," Gupta says. "I think that's a really massive leap from what the television experience is today to where other companies want to try and take the consumer."
"We're trying to align ourselves with what consumer behaviour for the television looks like today; obviously evolve it a little bit, but evolve it in a natural manner, as opposed to completely breaking how consumers perceive TV today and trying to convince them that this is the new way to do things. We just don't believe you can build a bridge that crosses that massive a gap, where you go from consuming content for a few bucks to paying $60 for a AAA game."
Ultimately, OnLive, Gaikai, PlayJam and TransGaming all agree on one thing: the Smart TV market is young enough, and their respective models are different enough, for all four companies to co-exist. However, the conversation over which has the strongest approach purely in business terms is more difficult to dismiss. When asked about the future of gaming through Smart TV, every interviewee was certain that the television will eventually become the "aggregating hub" for all media content in the home, replacing DVD players, cable boxes, stereo systems, and, yes, even consoles.
And that's the key word: "eventually". In the end, the difference in who sinks, who swims, and who emerges as the market leader might prove to be nothing more than a matter of timing.
"I think you'll see TVs doing everything in the future, and all of those boxes that were plugged in around them will go away," Perry says. "It's the way the world is going, and I don't think that's something we want to fight."
"Something that's acceptable today, every year will become less and less acceptable going forward."