Instrumented Interconnecteds Intelligent
August, 6th 2013

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By Bart Bogaert, Business Development Executive for Cloud in IBM’s Benelux Innovation & Technology Group

bart 2000x2000 white bgFour years ago, I started to engage with telecom customers on positioning ‘streamed gaming’: hosting gaming hardware in the network center and streaming the game graphics as a video stream to the gamer at home over the IP network on his TV. Hosting of games is therefore sometimes called ‘Gaming in the Cloud’. At the network center we planned an Intel based server farm with powerful hardware graphics accelerators. At the consumer side we used a simple game controller connected to the TV set, which had a small driver to capture the controller’s commands. Although we successfully carried out some initial proof of concepts, major concerns were expressed concerning the impact of network latency on the gaming experience and the impact of traffic volumes on the network: telecom providers wish to provide high interaction games (car racing games for instance), but network latency can result in a bad gaming experience for the user.

After endless discussions on end-to-end network latency we started thinking about which kind of games should be targeted. As low-end / casual games can run on the setup-box and high-end games require graphical real-time rendering performance as brought by gaming consoles, this leaves the opportunity for streamed gaming to the middle spectrum of family games. A unique advantage of gaming in the cloud is the ability to play multi player games over the network without dedicated infrastructure, for example playing a racing game against your friends in the same session. Besides technical concerns there were also business concerns: how can you monetize a gaming service, when game developers are reluctant to give away margin, in particular as the games are not sold but rented, lowering their income.

Gaming in the cloud was evaluated by telecom companies all over the world. Several of them did proof of concepts and some of them started to define projects. The French market was definitely the most assertive: French telecom operators launched a gaming service quickly and it seems they even found a way to monetize the service. They literally jumped through the window of opportunity to grab market share and started to create consumer loyalty. The initial gaming platforms have evolved and now support for example multiple consumer devices (setup-box, personal computer, smart TV,…). I expect these gaming platforms will further evolve and telecom operators will adjust to maintain the customer base.

Over the past four years the market has changed considerably. Low-end / casual games are nowadays provided by device manufacturers and downloaded by the consumer as an app on their device (smart TV, tablet or mobile as these devices are getting more powerful with better screen resolutions and embedded hardware for game support (e.g. 3D accelerator). Community gaming and high-end games, on the contrary, are provided directly by game console manufacturers such as Sony, Microsoft and Nintendo through the new generation of IP enabled gaming consoles.

Conclusion: telecom operators risk to be squeezed by the direct relationship between game providers and gamers and risk to become a commodity provider in connectivity for gaming services.

As the decline of the game console is underway and the industry landscape has changed quite a bit, we can expect further changes. It now costs much less to develop a game and games are being sold at a relatively low price. The trend is accelerated by the continuous growth in the number of applications available in app stores for IOS, Android and Windows platforms. Game developers are trying to figure out how they can be profitable in this new industry eco-system. I expect the streamed gaming approach to fade away over time, but we will certainly see new successful cloud based business models for games!

So the game is not over… it will be a totally different game!

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