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Wada aims to give cloud tech a silver lining

Former Square Enix president discusses his streaming startup Shinra, the unsustainable AAA market, and VR's fragmentation problem

"It doesn't matter how good your business model is, or how good your technology is, if you're unable to give experiences that people really enjoy sustainably, you're not going to survive. It doesn't matter how long you've been in the business. No one's batting 1.000."

That's Yoichi Wada, former president and CEO of Square Enix, speaking to through a translator at last month's E3. He's also speaking from experience. Square Enix struck out in its fiscal 2013, as three titles--Hitman: Absolution, Tomb Raider, and Sleeping Dogs--sold in the millions, but still fell short of expectations. Wada stepped down from those positions shortly after, but didn't stay on the sidelines for long. He returned the next year as president of Shinra Technologies, a new Square Enix subsidiary focused on cloud streaming technology.

"One very big point of differentiation between us and previous quote-unquote cloud games is that they weren't able to provide new game experiences"

To date, experiments with cloud technology haven't done well in games. OnLive finally shut down in April, years after it became clear the first foray into game streaming had fallen short of promises. The incredibly vague-yet-infinite "power of the cloud" was part of the Xbox One's initial marketing campaign, one that helped give Sony a head start in the current console generation. Gaikai is the closest cloud gaming has to a success story, having sold to Sony for $380 million and providing the backbone of the nascent PlayStation Now. Though they all claim common marketing lingo, Wada looks at these efforts as essentially unrelated to Shinra.

"One very big point of differentiation between us and previous quote-unquote cloud games is that they weren't able to provide new game experiences," Wada said. "They used the terminology of the cloud, but we're coming at it from a completely different angle of what kind of new experiences the cloud can provide to gamers. Why weren't they able to get gamers' interest and long-term support? They were just taking what could already be done on a local PC or console and moving that to a server, and focusing on streaming distribution. We are focusing on what's possible if you take the computing to the server-side, and what new experiences you can create from concentrating that computation."

To date, Shinra has announced three projects from third-party developers, all promising to use the technology to create multiplayer worlds beyond the capabilities of current consumer technology. Hardsuit Labs is working on a life sim where players will shepherd the evolution of life in neighboring territories that interact even when their creators aren't around to witness it. Human Head is taking to the high seas with a massively multi-pirate game where nautical tactics will need to be adjusted to compensate for ever-churning seas, and Camouflaj is creating a stealth game where environmental destruction plays an integral part of the action. None of those games has been properly shown off yet, but Wada is hopeful that they will be able to quickly dispel any negative perceptions about streaming technology that were created by prior underwhelming efforts from other companies.

"The term multiplayer has a certain connotation now, and we believe that's going to change"

"I think that the terminology of 'cloud' meant nothing when they were using it," Wada said. "So it will only be a matter of time before the market forgets they were even there, and we'll be able to redefine it in our own image. But if there is a negative perception of the cloud, we might have to think about creating a new terminology that really represents what we're doing."

Of course, Shinra's technology lends itself to certain types of experiences. Rather than dedicating a supercomputer to a lone customer to enjoy a single-player narrative-based game, it makes more sense to have it creating massive worlds that a multitude of users can experience simultaneously. However, that doesn't mean Shinra will be limited to massively multiplayer online games; at least, not in the way people traditionally think of them.

"The term multiplayer has a certain connotation now," Wada said, "and we believe that's going to change. It's going to have repercussions on the actual game design, but it's going to have a lot to do with how we actually design our platform. You're going to have multi-person interactions, but it's going to probably change from what multiplayer today means."

Likewise, Wada sees Shinra lending itself to certain business models more than others. Given the costs of running an online world, he expects games to embrace microtransaction-driven models considerably more than one-time purchases. While the details of the business model are a significant concern for Wada, they aren't his top priority just yet.

"We have three pillars we're focused on," Wada said. "The first is making sure our technology is rock solid. The second is having content that is able to leverage the power of our technology. The third is business model, and making sure it's sustainable for keeping all three. We've been focusing on those in succession. We are a startup, very much a venture, and so we only have limited capital with which to do that... Compared to my time as a CEO of a much bigger company where I had more funds to put towards these, there are some frustrations I'm having. But I think we're succeeding at what we're doing thus far."

"[Y]ou're probably going to see a burst of the bubble in AAA. I think AAA is not sustainable as it currently is"

Those frustrations aside, Wada doesn't sound like someone who misses his old job as the head of a massive AAA publisher all that much.

"Looking at AAA games, they've kind of come to a crystallization," Wada said. "They're getting really pretty, and they're costing too much. It's really hard for people to recoup the cost of the game. On the other end, a lot of the growth is in mobile or casual games. And the market's growing there. But what you're seeing is a gap between those two. And you're probably going to see a burst of the bubble in AAA. I think AAA is not sustainable as it currently is, as per the cost structure I mentioned."

He likened the divide between AAA and other games to the gap between Hollywood movies and traditional theater, but with AAA console games playing the role of the theater, and casual, mobile, and other massively successful mainstream offerings standing in for Hollywood. Hollywood may be bringing in more money, but the theater represents a longer tradition, and still serves both an audience and a function in the ecosystem.

"As long as the theater still exists, you're going to be able to have people with a certain acting acumen who are potentially able to reroute into the movies," Wada said. "But if the theater were to disappear, you'd have people without basic skills getting into movies."

It's unclear which side of that divide technologies like virtual reality and augmented reality will fall under. While companies like Facebook and Microsoft are sold on their potential to hit the mainstream and redefine a part of everyday life, Wada is a bit more skeptical.

"Looking at [VR] from a business perspective, you have to look at the pitfalls of not having a standardization"

"Looking at it from a business perspective, you have to look at the pitfalls of not having a standardization," Wada said. "We're seeing multiple types of devices, and from a development perspective, it's very difficult to ensure that what one game maker is making will be able to scale out to the entire VR market or whatever it may be, because VR means different things to different manufacturers. So I'm not interested in that yet personally because of that reason. It's going to be very difficult to scale because of that lack of standardization, and that's not something I see that's easily fixable."

That's one prediction Wada might be happy to be proven wrong about. If VR and AR do take off, Wada thinks it's unlikely that they would rely on local processing power strapped to people's heads. He finds it much more likely that they would use a centralized computer powerhouse like the kind Shinra is working on. The timing of the two technologies might also work well together. Wada said Shinra would not launch until it had games ready that could only be created through its platform. At the moment, the company hopes to be able to deliver on that promise sometime next year. If it does, it will serve as a welcome exclamation point on a redemption narrative that began when Wada struck out at Square Enix.

"One thing I can say about managing a game company is it's all about how many at-bats you get, how many times at the plate you're able to get, and how many times you're able to try to provide those experiences," Wada said. "And even if some don't fly, if you're able to stand for the next one and provide that, you're always able to potentially climb back up on the top and regain the relationship with gamers."

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Brendan Sinclair avatar
Brendan Sinclair: Brendan joined in 2012. Based in Toronto, Ontario, he was previously senior news editor at GameSpot.
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