Above the Clouds

I got asked a question just recently, "why would anyone use Gaikai when there's ten other companies?" What are you talking about? There's this confusion about what cloud gaming is. It's a simple meaning, your game runs in the cloud. If you go by that concept you've then cut out 80 per cent of the room. And then to be a real cloud gaming company you must have a real cloud gaming network, a global network of servers to run it. Because if you don't you're not a cloud gaming company, you're a tech demo or something. If you use that as a basic definition you've narrowed it down to two companies, Gaikai and OnLive. That's a global network that runs games on the cloud. The second kind of company is actually just downloading games that have content delivery networks [CDN] delivering data. That doesn't sound sexy at all and they call themselves cloud gaming even though it's not. My definition there is cloud delivery.

Step two is continued streaming, allowing full games to play. Step one was trials, step two is full games. And then full games will be unlocked across the whole network so all retailers will be able to do full games. And then step three is tablets. Our tablets are looking like some of the most exciting things we are doing.

Not the way we'd like you to. We can run 60 frames per second on an Android tablet and when you see that, knowing that hardware is better than a PlayStation 3 or an Xbox because those are six year old devices and you're looking at a game with those levels of graphics, really tight, that's the moment where you can see where this is going... I love the fact I get to see this stuff, I get to see what's coming. I have played Crysis at my house with an 8 millisecond ping to a data centre at 60 frames per second. I had an epiphany. If you think about digital televisions, you're plugging in your Xbox to that and those TVs will add 70-100 milliseconds of latency because they were never built for speed. If you're watching TV with a 100 millisecond lag it doesn't matter. But because we're working directly with the manufacturers of TVs, in 2013 when they make the new model you can bet your bottom dollar we're going to push for a direct connection from the Ethernet port to the screen. So we can get instantaneously from that port to the screen without going through any of the filters and all the rest of the stuff they've got in there. We went for a very dense server network, OnLive went for three, we went for 24. If I'm in London I'm 5 milliseconds from a data centre because we have severs in London. OnLive is in Luxembourg, so in London we win. That religious focus on the speed of the connections has been absolutely critical to our strategy. The money is in the high-end games. I agree with the long-tail, but it's a blockbuster driven industry whether we like it or not.

My guess is about three months from when Facebook launches, about 90 days from that. I'm not aware of any technical hurdles we have that would stop it. But there's a very big difference between the way we're doing it and the way OnLive is doing it. They have to modify the game, they have to get the source code to the game. Gaikai doesn't require modification of the game. To give you an example The Witcher II was given to us and them at the same time. We went live with Witcher II immediately and now four or five months later they still don't have that live, and that's because they have to touch the code. The whole structure of Gaikai is about not touching the code. When we show World of Warcraft it's the real thing, it's not like we had to go and tweak it to get it to work. That means that every game in history remains compatible with our solution. We can create really cool retro services. And you've seen emulators of the original Mario Kart on Gaikai, it's effortless.

My take on it is very simple. I believe the console manufacturers will stop calling them consoles on the next cycle and they'll be media devices. But there's a lot of companies already doing that. There's lots if different media devices that are adding multiple services and if those devices add cloud gaming you're going to see great gaming, the best gaming brands in the world, appearing on those devices too. It's going to become confusing to a consumer. When it's clearly defined as a gaming box and it's just a gaming box and the price is as low as it can be it's nice and clean and we understand that. But it's not that simple anymore, it's more and more complex and the more they push into the media space they're going to have a lot more competition. I cannot see a future where I want to keep dealing with those. Imagine there was a Netflix box - I don't want one. Just put it in the TV. Give me an Apple TV with it built in. I just can't see a future where you're going to want to pay for a box that's half the price of a TV again that sits on the table in front of the TV when it can be embedded in and cost a lot less. This isn't about cloud gaming, this is about strategy of "what are you?" in the perception of the users. I see one more cycle and then they start to become something else. They become part of the entertainment ecosystem.

You do not want to be the console that can't do this. You do not want to be the retail website that doesn't have playable games on it. You don't want to be the gaming website that you can't buy a game from. It's not that big a bet and you're safer. I don't think they would avoid it. I like to look at the stats - at Cloud Gaming Europe there were six attendees from Microsoft, two from Sony and zero from Nintendo. That's a snap shot of who's paying attention. Overall it's unavoidable. They've got to take it seriously because it's better for consumers. I would play a lot more games if I fired up my Xbox, clicked on a game and it started playing straight away. I don't want to take your console from your cold dead hands, that's not the case at all. You're going to continue to play the way you play, but just imagine that you could have an opinion on all games because you've been able to try all of them. Each evening, flick through four or five games that just came out.

What's occurred here is we've ended up convincing the publishers to make their games free-to-play and that's a big step. Now with Gaikai you can try every game for free. You don't have to go through the pain of buying it. Try if for free, share it with your friends and if you love it, pay some money for it. And it's up to publishers to come up with different pricing paradigms because there's not so many mouths to feed. You don't have to deal with distribution, warehouse, boxes and manufacturing, it's all gone. There's that argument that people want to own physical products, hold them and touch them. I'm one of those people, I still have laser discs in my house. But the problem is this isn't the way the world is going. Facebook has hundreds of millions of people playing games where they don't have a copy of the game, they don't have a save of the game, nothing to back up. It's not your data! This is something that's already happened, we're not taking away the physical ownership of goods. Hundreds and hundreds of millions of people are doing it this way with Spotify, with Netflix. We've changed our relationship to data and I don't feel like it's a loss, it's a gain. Gaming is going to get there too, with a Spotify for games. Instant access to all games. We're running a platform, if someone wants to do Spotify for games they can do it on the Gaikai platform.