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New technology could upend the video-game market

Daniel Howley
Technology Editor
Yahoo Finance
Cloud gaming will let you play high-end video games on nearly any device you own.

We’re in the midst of a gaming revolution. From massive multiplayer titles that have pushed well beyond mainstream recognition like “Fortnite” to the absolute dominance of smartphone and tablet gaming, it’s never been a better time to be a gamer.

But a handful of companies including Electronic Arts (EA), Google (GOOG, GOOGL), Microsoft (MSFT), Nvidia (NVDA) and more are working to develop what could be the next big advancement in gaming. It’s called cloud gaming, a Netflix-style system in which you stream video games from incredibly powerful servers to any device you can imagine — from a game console to a smartphone to a $400 laptop.

One such company, Blade, recently launched its Shadow service for users on the East Coast. Shadow lets you play the kind of PC games that normally require a $2,000 machine. We’re talking super high-end graphics, 4K resolution running at 60 frames per second, on your smartphone.

It sounds, well, unreal. But I’ve played it, and it works. And if it proves successful, it could completely change the industry from the we pay to the way we play.

Cloud gaming and how it works

Cloud gaming is the Holy Grail of gaming. For years, I’ve dreamed of carrying my progress on video games from my smart TV to my computer to my phone. Sure, there are gaming laptops, but they’re usually big and bulky and have short battery lives when playing games.

Cloud systems like Blade’s Shadow, or Nvidia’s GeForce Now, which is in beta and available for free via invitation, work by essentially giving you access to your own high-power gaming computer. These machines are run out of massive data centers that you jack into via any available broadband connection. The data center computers do all of the heavy-lifting — they run the games then send the video signals back to your own device.

The Blade Shadow let’s you play games on PCs, tablets, smartphones, heck, nearly anything you own.

In the case of Nvidia’s GeForce Now, you play the games via Nvidia’s GeForce software. Blade’s Shadow, on the other hand, provides you with a full Windows PC that you can run games or other software on.

Sony (SNE) offers its own game streaming service called PlayStation Now, though it limits you to streaming games to your PlayStation 4 or PC. The games are also limited to older offerings, which is great for gamers interested in classics or titles they may have missed, though not the latest blockbusters.

According to Gartner Research vice president Brian Blau, there’s also a larger push in the industry to put games in front of as many eyeballs as possible, which also means getting them on any devices that will support them.

“There’s a big push in the game industry to play games in lots and lots of different ways,” Blau said. “And you could say that streaming could benefit end point devices that are just never going to have significant compute capabilities.”

Blau used the example of connected eyewear that, despite not having a lot of power, could still allow you to stream games and play them anywhere you can find an internet connection.

The roadblocks to the promised land

Cloud gaming might be generating renewed interest thanks to rumors that Google and Microsoft are developing their own services — but cloud-gaming efforts haven’t always lived up to the hype. OnLive, a cloud gaming service that never quite got off the ground, ended up $40 million in debt before Sony finally bought it and shuttered it for good.

“I think business model and user experience have been some of the stumbling blocks, and maybe that’s why it hasn’t taken off so far,” Blau explained.

“I’ve got Nvidia’s (Geforce Now), I’ve tried Sony’s (PlayStation Now), and I’ve tried others too on PC. So the experience, you know, for the most part works, as long as you’re in a place where the connectivity is not so bad. You have to have a certain amount of bandwidth and a certain amount of low latency to be able to support those experiences. And if you have that it works fine,” Blau said.

Nvidia’s GeForce Now is available on Macs and PCs.

Unlike streaming movies or music, gaming requires constant inputs from a user. Those button presses need to be sent to a computer server hundreds of miles away, tell your character how to move in the game, then have the video information fired back to your device where it’s displayed. Even the slightest hint of latency, or lag, will throw off the whole experience.

There’s also the fact that service providers need to build out data centers across the country dedicated to playing games. A company couldn’t, for example, build a data center in California and expect customers to play using its computers in New York; the latency would be too much to make the game truly playable.

It’s not just making sure the data can get back and forth from your device quickly, though. As Nvidia’s senior product manager for GeForce Now Andrew Fear points out, gamers’ home routers can be a chokepoint for data speeds that can impact the ability to stream games.

“You hear these great advertisements for like Fios, ‘Get 300 mbps in your home, AT&T (T) get your 1Gb broadband, these are really great stories of like the pipe as it ends up at your front doorstep or coming into your garage where it’s perfect,’ ” Fear said. “But then try getting that into your house at 100% quality everywhere, and you’ll find that what happens is people tend to have really bad routers or bad network setups that don’t have good quality.”

Fear, however, said that Nvidia is working with router companies to ensure that data speeds are up to snuff when it comes to handling streaming game data.

The benefits to game companies

The ability to play games whenever and wherever you want sounds great for gamers, but cloud services would also provide a real benefit to game companies like Microsoft, Nintendo and Sony. That’s because instead of having to sink money into manufacturing and selling the hardware gamers need to play games, a one-time purchase, they can charge monthly or yearly fees, generating a constant revenue stream. Consumers, meanwhile, get to access their games anywhere they want.

Blade’s Shadow is housed in a large server facility similar to this one.

But what about Nvidia, a company that makes its own graphics cards that gamers use in their own home rigs?

“For the people who already own a GeForce GPU, I would say it like this, ‘You know, we have a terrific product for a standalone desktop card, which gives you the best performance in the world,’ ” said Nvidia’s Andrew Fear. “You can put a curved display on it, you can put VR, you can put 3 GPUs, you can put a Big Format Gaming display, you can do pretty much everything you want. And that market is always going to exist and therefore … we’re not trying to go in there and cannibalize that market and say GeForce Now should replace your next GPU.”

Naturally, game companies could also see an influx of new gamers who never would have thought of buying a high-end gaming PC or console, but are more than willing to try games on their smart TVs or tablets.

Take, for example, Mac users. While many games are available for Mac, the majority are still PC-only. But with a cloud service, Mac owners can play PC games on their machines without having to invest in a PC of their own.

A game changer?

So will cloud gaming change the industry? That depends on whom you ask. Proponents will tell you that it could spell the end of consoles. In fact, Ubisoft CEO Yves Guillemot told Variety in an interview during CES 2018 that he believes the next console generation, the systems following the PlayStation 4, Xbox One and Nintendo Switch, will be the last we see before all games are streamed.

Fear and Blau, however, aren’t ready to make such bold claims. Nvidia’s Fear says that while the gaming market is massive and continues to grow every year, he doesn’t think streaming services will replace desktop GPUs. Blau, meanwhile, says he can’t predict what will happen.

“I think at some point, the nature of the game console as we see it today is going to change,” he said. “So I wouldn’t necessarily call it the end of the consoles, but I think you are going to see changes over time. In the future are they going to be these big boxes with optical disk drives? Probably not.”

More from Dan:

Email Daniel Howley at dhowley@oath.com; follow him on Twitter at @DanielHowley. Follow Yahoo Finance on Facebook, Twitter, Instagram, and LinkedIn

 

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