A final nail in the coffin of cloud streaming

Streaming gameplay from data centres was never a good idea, and now it's a dead one - but the tech that drove it is helping to reshape our industry

January always brings with it a rush of pundits eager to christen the newborn year. 2016 will be The Year Of... Well, take your pick. The year of VR! Almost certainly. The year of Xbox One! Quite probably, given Microsoft's trajectory of improvement, though if you think they're going to be beating PS4 on sales by the end of the year I've got a lovely bridge I'd like to sell to you. The year of Microconsoles! No, for the fifth bloody time, just no, not even if they've got an Apple sticker on them. The year of Smart TV! You're just mucking about now. The year of eSports! Eh, maybe. We'll get back to you on that one.

One thing that nobody, as far as I'm aware, is claiming that 2016 will be The Year Of is cloud streaming. Last year was going to be the year of cloud streaming, as was the year before that, and the one before that too, if memory serves; but with OnLive gone and the Gaikai-powered PlayStation Now receiving a consumer response more chilly than lukewarm as it rolled out last year, the champions of this particular sector have gone quiet. Moreover, 2016 started with the most ominous news possible for the sector - that Shinra Technologies, backed by Square Enix to the tune of $15 million, has shut down after failing to secure new funding.

"The much-vaunted Power Of The Cloud isn't actually changing anything about the games and experiences themselves"

Why take the closure of Shinra, a company which never made the kind of splash OnLive or Gaikai managed, as a death knell for this sector? There are a few reasons why I think Shinra was more important than its media profile suggests, and why its shuttering implies the end of the line for (most of) the cloud streaming dream. Firstly, Shinra was backed up by Square Enix - one of the biggest publishers in the world, and one blessed with a particularly remarkable back-catalogue of beloved, valuable software which ought to have provided a solid basis for any cloud streaming software. It was also headed up by former Square Enix boss Yoichi Wada, whose lengthy backgrounds both as a publishing executive and as an investment banker would suggest that Shinra's failure to attract investment is down to a genuine disillusionment with this sector among investors, not to any failure of Wada's management.

Secondly, Shinra took an approach to cloud streaming that was arguably more interesting than its competitors. Where most cloud streaming firms are focused on creating services that simply move the processing load of existing games and retro titles over to server farms (so the consumer gets the same experience, just streamed over the Internet rather than rendered locally), Shinra was working with development partners to try and come up with new games that took advantage of that architecture to deliver experiences that couldn't be achieved by the existing technology model. What those experiences might have been, we don't know; perhaps we never will, now that the company has shut its doors. Whatever leaps had been made by the talented developers Shinra was working with were clearly not impressive enough to convince investors to part with cash.

In a sense, this highlights the problem with cloud streaming as a concept - that what it has promised up until now isn't actually a change to the experience of the game, just a process of moving around the pipes and plumbing that deliver said experience. As a consumer, the proposed advantages of cloud gaming are really just window dressing around the game experience; you'll be able to start games without a heavy download, and play high-fidelity games on devices that aren't equipped with powerful graphics chips. On the other hand, you'll be at the mercy of your Internet connection for the actual quality of the game (or even its playability at all), and devices without powerful chips tend to be mobile devices, where questions of mobile data caps rapidly loom into view, and which function poorly as controllers for games designed for PCs or consoles. There are pros and cons, sure, but however they balance out, they're all essentially rearranging deck furniture - the much-vaunted Power Of The Cloud isn't actually changing anything about the games and experiences themselves.

Cloud streaming could still have been a very big deal, of course, if it turned out to be hugely appealing to game publishers - even if it was still delivering the same experience to consumers, if it was a cheaper and more efficient way of delivering that experience, it would be embraced. The problem is, it's not. It shunts the actual cost of hardware, presently borne by consumers buying devices, over to game operators, meaning a huge up-front expenditure and game pricing that has to find a way to recoup the entire cost of the hardware the games run on. In an era when consumers are rapidly finding themselves equipped with more and more high-powered computing devices (just look at the benchmarks for recent smartphones, which comfortably exceed the power of the last generation of consoles, let alone the rapid adoption of the new generation of enormously powerful consoles) this seems like a bizarre and utterly unnecessary centralisation and concentration of financial risk.

In short, cloud streaming was a solution in search of a problem - and most of its proponents didn't even seem terribly keen on that search, proposing instead a variety of half-baked services that would essentially let you use your existing, powerful computing device to play games at lower quality and less reliably than they would have managed with local processing. Shinra Technologies, to its credit, seemed to set out to actually find the problem to which cloud streaming might be the solution, working with developers to figure out what new, worthwhile experiences could actually be delivered with this architecture that would be impossible on the existing distributed-computing, thick-client approach. That the company failed in this task, at least in the eyes of its would-be investors, genuinely feels like the last nail in the coffin of the cloud streaming dream.

"The core technology behind cloud streaming was solid, it was the business model and the overall concept that was deeply flawed"

PlayStation Now lives on, of course, but it's a service adrift; it's not clear who it's for or even why, exactly, it exists. To some degree it's a legacy of a hedged bet that turned out to need no hedging, a project initiated back in the time before the launch of the PS4 when most of the industry's analysts were confidently predicting that the new generation of consoles would launch softly and mark the rapid downturn of the entire console sector, perhaps performing so badly that they would be the last generation of home consoles. A streaming service that would let console-type games be played on the devices people would still own after this predicted rout of the home consoles seemed like a good pitch at keeping Sony and PlayStation relevant in a world that no longer wanted to buy full-fat console hardware. Here we are at the start of 2016, though, in a world where the Xbox One outsells its predecessor and is still being trounced by a PS4 that, beating everyone's expectations, is outselling even the stratospheric PS2. PlayStation Now is a way of delivering a limited selection of old games at an uncomfortably high price, in a world that's largely focused on the next PS4 blockbuster coming down the line; it was a good backup plan, maybe, but we're in a world where Plan A worked and Plan B is left fidgeting on the sidelines.

The sputtering out of the dream of thin clients and cloud streamed gameplay doesn't mean, of course, that the cloud isn't relevant to games; cloud storage and processing is still an exciting technology whose impact on games has yet to be fully felt, but that's rather different from the inelegant, brute-force approach of rendering actual gameplay in a datacentre and shoving it down a pipe to the end-user as a video stream. Equally, the actual technology developed in pursuit of that dream remains incredibly relevant, just not, perhaps, in the way that its creators imagined. Streaming gameplay is a big, big deal, not from data centres to consumers but in reverse. Essentially the same tech which would have powered cloud streaming has been flipped on its head to deliver live streamed gameplay from countless PCs, PS4s and Xbox 360s, as more and more consumers share their play sessions on services like Twitch and YouTube and more and more of their peers tune in to watch. Video streaming tech also crops up in places like the PS4's ability to treat the Vita or an Xperia device as an external display. The core technology behind cloud streaming was solid, it was the business model and the overall concept that was deeply flawed; it's the technology that will live on, powering new experiences and new ways of consuming videogames that are helping to redefine what consoles are and how people interact with them.

2016 won't be the year of cloud streaming, but it will be the year in which the technology that underwrote the whole cloud streaming idea - daft and malformed as it was - influences our industry and our medium to a greater degree than anyone imagined. Gaming, once essentially a private pursuit, is more public than ever before thanks to this technology; like a phoenix from the ashes, the video technology of a now-dead dream has burst into new life, and there's no doubt in my mind that 2016 will see streamed gameplay go from strength to strength, and open up new possibilities we never even considered back in fusty old 2015.

Latest comments (20)

Richard Browne Partner & Head of Interactive, Many Rivers Productions2 years ago
Playstation Now is a service looking for a business model and an audience. Netflix style service for gamers? Well, why would a Publisher sign up for that when they're doing great business at $60 and a bunch of DLC. Previous gen games? Yeah, like everytime we speak of backward compatability on a new console its just a marketing check box to appease moaners, its rarely ever used. Expecting an audience beyond the console market? Yeah, that's not happening, we've hit a threshhold of around 100-125m people who are interested in complex controllers and the games serviced by that, by all accounts that's shrinking not growing. I've been very impressed by Playstation Now, I just can't see an application for it in my life today. Tomorrow? Sure. For now I own a PS4 and thus it's redundant. Cloud base gaming without me forking out $400 for the box to start? Sure, I'm all in. They just can't co-exist - for now.
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Michael Harrell Studying CS, University of Utah2 years ago
I know I'm in the minority, but I really wish backwards compatibility was a standard feature. I absolutely would use it. I have a PS2 hooked up to my tv right next to my PS4, and it has a PS1 disc in it (Final Fantasy Tactiics). I would love to be able to play all of my PS1, 2, and 3 games on my PS4.

While I love the idea of Cloud streaming, the business model just isn't there for PS Now. I have no idea why i would pay for what they currently provide. Yet, I have dozens of digital copies of PS3 games from PS Plus that have been gathering digital dust, I cannot play because I don't own a PS3. Why can't I use PS Now to play those? What's the deal?

Edited 2 times. Last edit by Michael Harrell on 15th January 2016 4:44pm

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Mark Reed Chairman, Heaven Media Ltd2 years ago
To be honest anyone that was sucked into the thought that Streaming was a 2015 or 16 thing deserves to be disappointed. The rest of us understood streaming is exactly the way 'a' particular route of gaming will go. Really anyone could see that Onlive would fail and also that Sony bought Gaikai for mainly the IP which gave them an investment for the next 5 years plus.

The same is true of VR, people need to adopt more patience with technology, it is a big world out there and lots of stars have to align to make things work. With VR it is Standards, titles (games or otherwise) and just the technology price points to make it mass market. All will come, it just will not be in the heartbeat that people sometimes naively think possible.

Game Cloud Streaming is exactly the same. The key thing is Cloud is now the most essential component in gaming from updates to live match making, to DLC to all forms of game delivery. Streaming will play a part in our gaming industry for sure, bandwidth and other technologies have to catch up though....but as always it will. Actually the big question is what type of games will be played to take advantage of Game Streaming. Lets not be simpletons and try to work out current popular games that may best fit because that is lazy. Can you imagine Nintendo not releasing the Nintendo Wii because it wont work well with games like Need for speed or Madden. No they help develop titles that leverage the technology. That is why Wii Sports is the 2nd biggest game of all time.

To call Cloud Gaming dead is dumb, it is just still in development and some silly people have lost lots of money trying to commercialize it too early. Don't see their failure as a statement of the value of the technology.
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Show all comments (20)
Mark Reed Chairman, Heaven Media Ltd2 years ago
Sorry Rob also 'The year of eSports! Eh, maybe.'... Please feel free to pick on this one but be assured 2014 to 2015 were years of eSports, you just missed it. Twitch, League of Legends, Dota2, CS:GO, Dreamhack, ESL, I can send you some links if you like.
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Renaud Charpentier Game Director, The Creative Assembly2 years ago
Computing real time "twitch" gameplay remotely through internet is dumb, it will always be dumb and VR high demanding reactivity makes it stone dead for that usage unless we break the laws of physic. Game streaming in a world where the net is not getting much better but any smartphone is becoming a computing beast doesn't have a future. This was a bad idea, unsound technically, unsound financially, it's dead, RIP.
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Donald Dalley Freelance writer 2 years ago
When PlayStation Now was announced, I had to live with a monthly data cap. PSN was just not going to happen, for me. Now that I have unlimited data, there is still no reason for me to look to PSN for entertainment ideas. I still have all of the old hardware that could play the lower res titles, if I ever wish to do so. I knew as soon as I heard the details of what they were trying to do that there would be severe restrictions for a lot of consumers. Delivery has to be up to snuff, games have to he worthwhile and costs have to be low. I'm still waiting.
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Nicholas Lovell Founder, Gamesbrief2 years ago
I think esports became very popular in those years. I don't think the money is there yet at scale. It's a fascinating and growth area, though
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Jeff Kleist Writer, Marketing, Licensing 2 years ago
The real problem is that it is prohibitively expensive to run these data centers. Netflix can serve fifty customers on the same bandwidth and hardware PSN can serve four. With much lower overhead to boot.

Microsoft is going to hit an Xbox 360 Netflix all you can eat service that will work just like EA ACCESS. And it's going to cost them pennies a download. It costs PSN 8-10 times that, PER HOUR To let you play. Once those files are served up, someone can play it for 400 hours, and it still cost Microsoft a few sense to download the game. Streaming gaming services are rather silly except for a very narrow range of games, none of which will are likely to generate the kind of revenue it takes to support their data centers.

I will tell you that the algorithm and use on PlayStation VR is almost certainly derived from PSN's predictive algorithms and their kludged up system to make VR work Without the horse power to actually make it work. Theres definitely an air of scrambling at Sony right now, trying to find a lot of applications for their billion dollar albatross. I expect that, along with the likely eminent introduction of a PlayStation 4slim that likely supports Blu-ray 4K, a big reason why they failed to introduce a UHDplayer this year
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Aleksi Ranta Category Management Project Manager 2 years ago
What happened to Microsofts "power of the cloud" with xbox one?
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Nick McCrea Gentleman, Pocket Starship2 years ago

Read up a bit about Crackdown 3 if you're interested, servers will be used on demand to power the fully destructible city in multiplayer mode.

Here's a video to a tech demo the server physics middleware guys involved in the game did at Build 2014.
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Adam Campbell Game Production Manager, Azoomee2 years ago
I believe in this technology and its application, already felt convinced about its future when I tried OnLive for the first time several years ago. However, its just a matter of timing and way too bleeding edge for most consumers or publishers.
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Jeff Kleist Writer, Marketing, Licensing 2 years ago
Adam, it's not that it's bleeding edge. It's that it's ridiculously expensive to run, a situation unlikely to change.

those nights custom PS3 blades that serve four people allegedly cost about $2000 each, and that's before the cost of designing and tooling for them. They require way more power than a conventional server blade, which means more cooling, higher electric bills etc etc.

Even if you're running. X86, Netflix doesn't encode on the fly. They have 3-4 versions of a movie on tap. Most people are consuming 1/6 of the required minimum bandwidth for PSN, or any other streaming service.

These things aren't going to get cheaper. and nor is the price people are willing to pay going to get bigger.

And then you have the Japanese publishers, many of whom greatly overvalue the worth of their games, and who won't sign onto all you can eat packages.

It sounds super good on paper. There's just no time in the foreseeable future where you're going to do anything but lose money
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Bob Johnson Studying graphics design, Northern Arizona University2 years ago
I tried out Borderlands on OnLive and there was way too much delay. The experience sucked and I never went back. After that I was pretty confident they were selling snake oil.
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Alfonso Sexto Lead Tester, Ubisoft Germany2 years ago
I think that, the same way as the jump from physical to digital was slow (and still ongoing), gamers are not ready to relinquish the feeling of ownership over the game they play. What works good for Netflix doesn't do for our industry's audience.
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Nick Parker Consultant 2 years ago
I think Rob's having a cheeky stir. The digital delivery of on-demand games is not broken, it's just restrained by an absence of robust global broadband infrastructure, more advanced cloud technologies and therefore a business model that could deliver meaningful income for the value chain. It will happen.
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Robin Clarke Producer, AppyNation Ltd2 years ago
Netflix seems to do okay even within the limitations of current broadband infrastructure. I'm not holding my breath for a service based on Onlive or Gaikai's model ever working.
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Sandy Lobban Founder, Noise Me Up2 years ago
In terms of Sony, it's a shame the management sacrificed Studio Liverpool in order to purchase Gaikai. They got pre-occupied with threats at a weak point. There is no way it's made anywhere near the 500 million (plus running costs) back. Bad business decision, and it looked like one at the time as well. Wipeout PS4 would have cost them a tenth at best, and would probably have made money instead of losing it. Streamed gaming is mostly applicable to low values economies, but unfortunately it also happens to be where the worst internet infrastructure is to be found. Von Neumann would have had a fit.
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Jeff Kleist Writer, Marketing, Licensing 2 years ago

The average Netflix user is running 3.5 Mbps or under, serving pre-compressed files off a hard drive with comperably zero latency restrictions.

PSN is running a live stream starting at around 15mbps with tight latency restrictions on a live encode off custom hardware.

They are hugely different prospects.
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Adam Campbell Game Production Manager, Azoomee2 years ago
@Jeff It most certainly is bleeding edge, and it can and will get cheaper. When launched as a thing some time ago, it wasn't time, and if there is a time, its not now. As a side note, PS3 Server blades are far from the only server hardware capable of delivering cloud gaming. Knowing what we know, I wouldn't expect it to be cheap either.
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Jeff Kleist Writer, Marketing, Licensing 2 years ago
@Adsm Not cheap enough. People who play games that need high end hardware don't put up with the lag and predictive algorithms screwing them up.

I'm using PSN as the example because it's the only one standing. And certainly an example of doing this as expensively as possible.
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