Peter Bernstein, Senior Editor
It is not just fun and games in the video gaming market, it is big business. A recent Gartner report estimates that the combined global gaming “ecosystem” (digital console, portable, online and mobile) will exceed $74 billion in 2011. This represents a 10.4 percent increase over the $67 billion in 2010, and Gartner projects the market to reach $112 billion by 2015.
Console and associated software sales are expected to remain over 2/3 of the market. However, the expectations are that:
- Smartphone gaming downloads will go from 15% of industry revenues to north of 20%
- Games are more that 75% of the revenue of the top 100 apps download at app stores
- iOS and Android revenues share of the U.S. market, for example, now represent a $1 billion market and are estimated as having garnered 34% of the portable game market
- Apps analystics firm Flurry in a recent post says the average transaction in iOS and Android “Freemium” games is $14 is rising and taking share from subscription sales
- Multiplayer online services revenues will experience exponential growth in the next few years in part driven by social gaming – connecting online games with social networks – which is accelerating the desire for interactive playing with multiple parties
All of this market robustness is driving the need/desire for gaming experiences where the player is liberated from traditional gaming constraints. The goal is enabling users to simultaneously participate multiple players, anywhere at any time, who interact in real time on the device of their choice where everyone has a compelling experience. In other words, gaming is quickly moving from one or two people in a physical location interacting through their console with their TV or via a purpose-built handheld gaming device to one that is increasing online, i.e., in the cloud where interaction can be with multiple players and on a variety of devices.
A recent analysis by Screen Digest predicts a $411 million service provider market for cloud-based multiplayer gaming by 2014, and expects this sector to go through a period of experimentation on the part of game developers and service providers, with respect to both technology and business models.
The article notes the market is moving from the two dominant multiplayer platform choices, game consoles and PCs with high-end graphics cards and purpose-built handheld devices, to cloud-based gaming services that target generic handheld devices, as well as PCs not optimized for gaming. Unlike console and purpose-built handheld-centric gaming, the generic devices will rely on cloud-based gaming servers to perform the intensive graphics computations and to stream images and audio in real time to them. This leads to two questions:
- Is the Cloud ready?
- Are the business models in place to maximize the opportunity?
Is the Cloud ready?
The short answer is that it could and can be. Alcatel-Lucent has been working on the enabling technologies to make the Cloud, and mobile networks in conjunction with the Cloud, multiplayer and multi-platform ready. In a recent TechZine article, Gaming Moves to the Cloud, Douglas Hunt, Technology Strategist for Corporate CTO, Alcatel-Lucent highlights industry trends along with the technology and business challenges and opportunities. In regard to evolving business approaches and Cloud readiness Hunt makes the following points:
Broadening the gaming platform: providers like Gaikai, Otoy and OnLive using different approaches, are launching cloud-based gaming services that target generic handheld devices, as well as PCs not optimized for gaming as a third type of multiplayer game platform. These approaches “are expected to include several models of collaboration among game publishers, developers of innovative real-time compression technologies and associated purpose-built hardware, providers of server farms, and service providers.” The differences in approaches of the three are:
- Gaikai will use a facilities-based server farm model employing a “demo approach” for gaming — users try a new game with a single click. Traditional game publishers will have access to the same consumer base as developers of browser-based games with the intention of making the barrier to impulse purchases as low as possible. Game publishers will keep 100% of their sales, while Gaikai will sell server time to the publishers.
- Otoy, is pioneering a highly-scalable, real-time compression technology. In partnership with AMD, Intel and NVidia, the goal is to develop graphics processing solutions that maximize the number of gaming end users supported by a server farm. Otoy intends to license its technology two ways: Otoy runs the licensee’s application on its servers, or the licensees runs Otoy’s software stack on their servers.
- OnLive has a hybrid approach to the two above. It has developed a compression algorithm that can encode and compress video game content into data for transmission with a latency of about one millisecond. At the server end, the encoding is performed by a custom-built chip designed by OnLive. OnLive’s offers an optional, inexpensive hardware box that plugs into a TV and performs the decoding. It does not charge a monthly fee, but allows users to watch others play selected games on its web site before purchasing.
Network preparedness
Hunt notes that some observers believe multiplayer and particularly mobile gaming cannot be successfully accommodated by cloud-based computational capabilities, citing:
- Not meeting network latency requirements associated with interactive gaming
- Concern that evolving methods for real-time computation and compression of high-quality graphical output will not meet end-user experience expectations as well
In simple terms, network and server interaction issues regarding time and image transmission quality will create gaming experiences on cloud-based games, especially on devices using wireless networks, to the point where fast-action games will be of unacceptable quality for commercial viability.
Does this mean Cloud-based multiplayer/any device gaming is literally a pipe dream?
ALU challenges the naysayers
Alcatel-lucent believes that there are answers to the challenges posed by the naysayers, and assert that Cloud-based multiplayer/multi-device gaming is a growth opportunity of significant proportion.
First, ALU says the initial growth will be in the context of broadband wireline and Wi-Fi access — where the technology is feasible and business model experimentation within the gaming ecosystem will create options and paths to success to meet the obvious market demand. Reality is data center virtualization and wireless mobility is enabling enterprise and personal applications to be delivered ubiquitously. And, when added to the exponential price/performance improvement in computing power that can process these apps on inexpensive mobile devices (smartphones, tablets, etc.) has ignited a user adoption rate of stunning size and scope worldwide. And, as noted above, the apps generating the most revenues are games. This is an opportunity of almost incalculable proportions.
Second. Yes, any Cloud-based gaming deployment will be constrained to the degree to which bandwidth and latency may be controlled between the server farm in the cloud and the end user. However, with the transformation in service provider networks to new OSS/BSS models, and upgrades to network infrastructures to be end-to-end IP, the era of relying solely on the “best effort” Internet is disappearing and will do so quickly in the next few years. Operators are pressed to create and deploy new services that generate profitable revenue streams and create differentiated value, and they will do so via services that differentiate on the basis of the quality of user experience as delivered over secure networks with guaranteed quality of service (QoS).
As ALU sees it, key to opening up opportunities for service providers to work with the entire gaming ecosystem is by enabling value-added network capabilities including differentiated services through a simple application programming interface (API) which is the key. The Alcatel-Lucent Application Enablement (AE) vision is stated as:
“From a technical and operational perspective, the AE API bridges the programming environment that the application provider uses with the network infrastructure awareness and protocols within the service provider’s network. For the application developer, it serves not only to expose value-added network capabilities, but also to enable an efficient development environment. For the service provider, it allows differentiation through QoS exposure, the opportunity for increased revenue through new business models, and the ability to help deliver an assured quality of experience (QoE) to end users.”
And, ALU justifiably touts the fact that through solutions such as the Alcatel-Lucent Open API Platform, Cloud-based gaming applications will be able to do precisely as suggested: take advantage of dynamic quality of service (QoS) policy creation and management, admission control, and bandwidth reservation.
Hunt’s article provides a thorough explanation as to how the use of the AE API can work for cloud-based gaming systems to be enabled to provide multiplayer/multiple device quality user experiences. Developers of Cloud-based gaming systems, whether independent or collaborative, are going to need high bandwidth and low latency networks to perform on, with the security and intelligence supported in the all-IP network architecture of an Alcatel-Lucent High Leverage Network (HLN).
The bottom line is that the answers to the questions posed above are:
- The network, through the evolution to end-to-end IP architecture, OSS/BSS evolution, and the addition of the SE API can be and will be ready for cloud-based multiplayer gaming on multiple devices.
- The API is key in the broadening of the business opportunity for all facets of the broadly defined gaming ecosystem, and is open for business and business development.
In four words, “let the games begin!”
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