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Cloud Based Gaming [pic] By Gautam Gogoi 10BM60028 Vinod Gupta School of Management Abstract Imagine how great it would be if you could play a high end game like Far Cry 2 or Crysis on your netbook or your mobile. This is what cloud based video game providers like Onlive or Otoy promise. The entire processing of the games will be done in the cloud or servers maintained by the provider while the game will run in your browser and you will be sending the responses through the web. In this paper the effects of these changes on the Video Game industry and Gaming as a whole will be studied.

The feasibility, limitations, challenges of this idea and the various players presently working on this new technology and their present progress in this regards will also be looked at. Initially it is planned as a paid service. But the possibility of all the costs to be covered by advertisement and nominal subscription costs as per economies of scale will also be analyzed. Video games and the Video Game Industry The definition of video game as per wikipedia is as follows- “A video game is an electronic game that involves interaction with a user interface to generate visual feedback on a video device.

The electronic systems used to play video games are known as platforms; examples of these are personal computers and video game consoles. These platforms range from large mainframe computers to small handheld devices. ” Below is shown the block diagram of a video game. The input device and the processor constitute the platform. Various examples of platforms are Computers, Play Station, X-Box, Nintendo Wii, mobile phones etc. The input devices are normally joypads or keyboards. A game software is a piece of software which is run by the processor to generate the required environment ith specific goals which the user has to achieve. It also defines the rules about what should happen in case of particular responses from the user. It has to be bought separately and plugged into the platform for the user to play the game. The display device may or may not be a part of the platform. Usually in case of computers and handheld device, it is a part of the platform, while for devices like Play Station and X Box, it is not a part of the platform. [pic] Any video game involves the interaction with the platform through an Input device.

The input is then passed on to the processor, which processes the inputs to generate appropriate outcomes using a game software. These outcomes are then displayed on the display. According to the outcomes displayed on the display, the user again takes necessary steps which are again transmitted to the processor through the input device. This cycle takes place continuously and the user interacts with the platform to control a person or a team on real time basis to propel it towards its goal, which can vary from killing an opponent to winning a game.

This process keeps on going till the final outcome of the game is reached (all levels cleared) or if the user reaches the termination stage (game over). Video games have existed since 1950s in various forms. But it is in the last 10-15 years, that it has grown exponentially. This growth can be attributed to the growing computing powers of the PCs and various other devices. It started initially as a thing for the kids. But today it is meant for adults as well, with adults and teenagers comprising of a huge chunk. In fact, as per a report by Entertainment Software Association, the average age of gamers in America is 35.

This can be partly associated with the increased maturity and complexity of games and also with the fact that, people who used to play games earlier have grown up but still continue to play games. Microsoft Flight simulator, is a very good example of a very complex and realistic game with even real pilots using it as a simulator to test their skills. Age of Empires is another wonderful game with large business connotations. Here you can build an entire empire and conquer all other empires to become the ruler of the entire land. With games such as this, it s no surprise that video games are no longer things that are just for the kids. Another very wrong conception is the fact that video game is a small industry. The video game industry is infact a behemoth which earned a revenue of $41. 9 Billion in 2007. It has already surpassed the music and the movie industry and is closing on to the book and the DVD industry. But the game makers have specially been impacted by piracy. According to a survey by the Computer Entertainment Suppliers Association (CESA), the PSP and the DS lost approximately $41. 7 billion in sales from 2004 to 2009.

Rampant piracy in places like India and China has specially impacted the PC Game makers. So bad is piracy that companies have stopped making games for places like China, because no one will buy them there. Also the sales from console based versions normally exceed PC based versions inspite of the large user base of the PCs. An example is that of Unreal Tournament 3 PC version selling 34,000 while the Playstation 3 version selling 86,633 in its first month. The major players include Sony, Nintendo and Microsoft with the platforms and game makers like Electronic Arts, Eidos, Konami etc.

Among the platforms, Sony Playstation is the most popular one. Some simple games have already come out in a cloud based approach. Facebook games are a prime example of this. But this paper does not deal with these types of games. Rather this paper deals with more complex games like crysis, call of duty etc which require much higher processing power. But games like those present in facebook, provide interesting clues to the direction in which cloud based gaming (I will refer to this word in this paper to mean high end games hosted and running from the cloud and not the facebook games) will lead.

Keeping this in mind lets look at some of the key characteristics of the Facebook games. Facebook games are immensely popular among people specially the more aged ones. More than 200 million play games on facebook in a month and the top ten games have more than 12 million active users each. A very crucial reason for this is that these games are free. Also it is a fairly new phenomenon and as such the novelty concept is another reason for a large number of users. The revenue for these games comes from analytics about the users playing the games and from advertisement. Also the nature of games is very different.

The game mainly focuses on cumulative effort. You will get more rewards if more of your friends play the game, or if you make friends while playing those games who will help you during the game. The most important learnings from these facebook are the user base and the revenue model which provides these games free of cost. The large user base and the popularity of these games across people of all ages is an evidence of the potential of cloud based gaming. As we progress through this paper, the revenue model of cloud based gaming will also be studied keeping the revenue model of facebook games in mind.

Cloud Based Gaming an introduction In cloud based gaming, the processor and the program are present in the cloud (internet). The input is sent to the processor through the internet. Also the processor sends the visual signals to the display device through the internet. As shown in the figure the red arrows represent links using the internet. The game usually runs on an internet browser on the side of the user. [pic] The service provider will be maintaining the parts inside the cloud and will charge a monthly rate from the users who will avail this service.

This rate can be a lump sum amount for a certain period of time or it can be on the basis of number of hours used. As the game runs on the cloud, it will result in optimal utilization of processing powers as a result of balancing of troughs and crests of various users. Let’s take an example of a game to see how this works. Suppose you are playing Fifa, a football simulation game. The game will be installed and running on the servers of the provider. The game will be displayed on your system through your internet browser. You will use your keyboard to give inputs to the game.

Suppose you want to shoot the football. You will press the appropriate button on your keyboard, which will then be sent to the servers of the provider through internet. The processing about the shot will take place on the server using the game software. The outcome of your shot will then be transmitted to your system and the display through the internet. This process will then be repeated as you keep playing the game. Impact of Cloud Based Gaming- Cloud based gaming will have an immense impact on the gaming industry as a whole and will also impact the computer hardware industry.

The various impacts are mentioned below 1. Platform independent gaming – This will be one of the biggest impacts of cloud based gaming. As games will now be hosted on the clouds, platforms will become redundant. The entire processing will then be shifted to the clouds. All you will need is a device which can access the internet, display the game and send inputs to the cloud. As such it will result in the end of consoles (in the long run). We will be able to enjoy the same games on netbooks, mobiles, tablet PCs, etc. This will also result in reduction of demand of high end PCs for gaming.

This is because, the moment the processing is shifted to the cloud, same resource will be shared by many users, thereby optimizing the use of processing power. 2. Game players will increase exponentially- Platform independence will result in a larger number of users or gamers. This is subject to the rate charged for the same, but considering the optimal use of resources and the economies of scale, the prices will definitely be lesser than what it costs now. This will also depend on the acceptance of the idea by the general public which will be discussed later. 3.

Crackdown on piracy- As the games will be installed on the servers, piracy will be stopped. Whoever wants to play games has to take a subscription. The game makers will get their share of revenue from the providers. This will have an uplifting effect on the industry. As more people pay for games, the cost per user will go down. This will in turn induce more people to join in. This positive feedback loop can finally lead to much more affordable gaming. 4. Nature of games to change from single player based to multi player based- As all games will be played online, the ocus will be more on developing multi player based games. This is already taking place, but with time even more emphasis will be paid to multi player modes specially those involving much larger number of players than those playing today. 5. Massive scope of advertisement as a result of high number of users- With large number of users comes the scope of advertisement. This can be another crucial factor in reducing the price which will again lead to more users. It is an added advantage that people of most age groups play games. As such, the scope of advertisement increases further.

Challenges and Hurdles – Although the benefits are numerous and the effects far reaching, there are many challenges and hurdles which have to be cleared for the benefits are to be realized. Lets look at the main hurdles towards this 1. Latency Issues- The time lag between the pressing of a button and the corresponding action will be a major deciding factor regarding how well this service is accepted by the gamers. Normally there is a lag of about 60-70 ms when we run games on our systems. But reaching to these levels at HD resolution and 60 fps (frame per seconds) is a huge technological challenge.

Infact many people have commented that reaching to these levels of latency will not be possible. But Onlive tests have shown a latency of about 140 ms at 30 fps. Although this might not be acceptable to hard core gamers, but casual gamers will be more than satisfied with this. 2. Video Compression- Cloud based gaming will require transmission of HD videos at real time basis. For this to be possible without any delay, some form of video compression must be used. 3. Resource sharing of the server- This is another crucial factor. Ideally one server should be dedicated for each user, but it is not possible practically.

Using one server for many less demanding games will be problematic as all games assume that they own the server’s resources exclusively. Also many servers used in processing of single game will lead to problems of transmission of data among the GPU’s as lot of data is generated in the running of games. When achieved, proper utilizing of server resources will enable the providers to further reduce the subscription cost by reducing idle server time. 4. Convincing users to migrate to this platform- A big challenge will be to convince users to move to this new platform.

Hard core gamers will be the hardest to convince because of things like latency issues. Also as most gamers already have a system at this moment, they will not migrate unless their systems have become outdated. So the migration will take place slowly as computers and consoles start becoming outdated. Many of the benefits will not be realized unless economies of scale are achieved and therefore this is a very crucial thing for the success of this idea. 5. High speed and dependable internet connection- This is a absolute necessity if cloud based gaming is to be experienced.

Onlive, which is a provider of cloud based gaming specifies 3 Mbps connection as the minimum required and 5Mbps as the recomended to use this service. Apart from speed, dependability is another important factor. The speed has to be uniform. Otherwise, the game will get stuck in between resulting in inability to play the game. Although this might seem a problem now, with time and advancement, this will soon cease to be a problem. 6. Handling a large number of users- At present Onlive is providing cloud based gaming but the user base is very small. It is to be seen how they can manage to cope with vastly more users as time progresses.

But this problem should be solved with time. Current Players Now let us look at the current players who have been working with this technology. Here we will study the current state they are in, how they have overcome the hurdles and their revenue model Onlive- It is the first company to come out with a model of cloud based gaming. Founded by Steve Perlman, a renowned entrepreneur and inventor in the field of video games, it has started its services from July 2010. The executive team also includes other renown figures like Mike McGarvey, a former CEO of Eidos Interactive and Tom Paquin, key developer of Netscape and a founder of mozilla org.

At present the monthly rental is 15$ and apart from that you also have to buy games separately. It has also come out with many popular games like Unreal Tournament, Prince of Persia, NBA etc. The reviews about the service have been mixed. Latency for the games have been found to be between 150-210 ms. Video quality also has been variable due to the video compression used. But framerate and graphics were on an average found to be good. The video compression has been managed by a proprietary compression system. Here the screen is divided into 16 parts and each part gets its own encoder.

Another thing they have done is the ability to retain and reuse most of the earlier video information. This is possible also across the various frames also. So if an object is moving from one frame to another, the same video data is used again to create the effect. The data centers are 5 in number with onlive going for a concentrated system rather than a spread out system. David Perry of Gaikai has criticized this by saying that distance is a critical thing in online cloud based services like this. Time will tell if this concentrated approach will indeed lead to lags or delays in the service.

The pricing structure of Onlive has been a serious put off. Games infact cost as much as much as DVDs. Add to that the monthly subscription cost. So even if you own a game, you will not be able to play it if your subscription gets over. But as this is just the beginning, costs are expected to be reduced with time and as more users start using this service. But in terms of technology, onlive is right up there. It has proven the technological feasibility of the idea and only time will tell us about the financial feasibility of the same. They are portraying themselves as a replacement of consoles.

They are even planning to come out with mini consoles that use the onlive service to deliver gaming service to televisions etc. But the present technology has a long way to go before it can compete with the consoles. The present system cannot compete with consoles for performance and as such most gamers will not migrate very soon. A critical thing for onlive will be increasing its user base. If it can manage to do so, it can provide games at much lower rates. It can also look for advertisements to further reduce the user costs. But till then, it has to slog it out against the existing consoles.

Gaikai- Founded by David Perry, one of the best known Video Game Industry veterans, Gaikai is another player in the cloud gaming sphere, but it has a slightly different model than onlive. Having received funds from TriplePoint Capital, Rustic Canyon Partners, Benchmark Capital it is also backed by Intel and Limelight Networks. Game companies like Electronic Arts and InstantAction have already signed up to use its service. The executive team also includes Michael Bowen, who was previously Director of Technical Operations at Facebook as well as VP of Operations at Sony Online Entertainment.

They are expected to come out with a Beta in December 2010. Although based on the same idea, the business model of Gaikai is quite different from that of Onlive. Gaikai is positioning itself as a service which allows users to test or try out new software. Suppose you are reading about a new game and you want to check out how it feels to play or use it. This is where Gaikai comes in. It will enable you to test run the software or game without the need of any download or installation. If you like it you can then proceed to buy that game. Gaikai will get its revenue from the software manufacturer who will pay for each purchase.

So Gaikai is not competing directly with console makers and rather it is cooperating with them. Although this idea is not as radical as Onlive’s, it is still a very effective idea with numerous applications. The possibility of testing a software can influence many more users to buy this software. Also this can act like a launchpad for full fledged cloud gaming service. Gaikai also differs in the way it will distribute its data centers. While Onlive and Otoy are planning few large data centers, Gaikai is planning about 300 smaller centers across the US.

They say that this way they can reduce the distance between the user and the data center. As such the performance of the service will be better. Otoy- Founded by Jules Urbach, Otoy was the first to promise cloud based gaming. But it has only come to prominence recently after finalizing deals with AMD, Intel and Nvidia. Infact AMD has been making a special graphics supercomputer which will be used by Otoy. The minnows among the three companies pursuing this technology, it plans to launch its services in summer next year. Its business model is not clear, but is expected to be in line with Otoy’s one.

Also it is planning to provide HD services of games, movies and applications through its services. The way ahead With Onlive already coming out with its services and the others expected to come out very soon, the market is expected to heat up and attract a lot of users. But the main question is that will sufficient users be attracted to this service. The hardest thing will be to convince the users to migrate to this new platform. The most obvious outcome will be that initially these services will coexist along with the presently existing consoles and platforms.

The hard core gamers will not easily migrate to this new platform and will be the last to migrate. Initially casual gamers will start using these services who do not own a very powerful system. But a lot will depend on the rate or price that will be charged. Till the prices are high, the number of users will not increase and most of the benefits will not be achieved. So according to me this service will continue to be an elite service for some years with people slowly adapting to this new service. But with the growth and advancement of technology, the prices will go down. The quality of the service will also increase substantially.

This will further encourage more people to join into this service. A lot depends on the patience of the firms and how long they are able to wait to reach profitable levels, because this technology will be accepted slowly. The three players presently in this field might not reap the full benefits of this, but this is surely a winning idea and someone will surely reap full benefits of this in the years to come. The tipping point will be reached when the user base will be large and diverse enough to support advertisement. Advertisement will further reduce the costs and as such encourage even more people to join in. nly at such low levels of prices will people from India and China be encouraged to join into this service. India and China are the key to this service because these are the two places with most of the people and maximum piracy. When people from these two countries will start joining this service, the number of users will start rising exponentially. Piracy will be reduced and game makers will start receiving more revenues, specially from people who were earlier using pirated versions of the same games. The actual benefits of cloud based gaming will then be realized. But there is a catch to this.

Many people play games because they are free, specially in India and China. If games become available only through the cloud, piracy will be stopped. As such many people might stop playing games. Therefore it is very important that the prices reach to a sufficiently low level to coerce such persons to try them out. I firmly believe that the things mentioned here have a very high probability of happening. The biggest reason which makes me believe this is the rate at which technology is advancing. With the growth in processing powers of computers and growth in internet bandwidths cloud based gaming is actually very near.

Another reason is the win win situation for all the players. With growing piracy it is natural that game makers will start taking measures to prevent it. Cloud based gaming is a very natural way to fight piracy. If the users do not have access to the games, how will they make illegal copies of them. Conclusion Cloud computing has revolutionized the computing world. Google, Amazon, Microsoft are heavily investing in it because it is the thing for the future. Already application like Google Docs and many corporate softwares are running from the cloud.

So it is natural that games also go to the clouds. Running application from the cloud enables better use of idle system time, thereby optimizing the use of computing powers. Also it is much more easier to upgrade the software or hardware as the updation has to be done only on the server and not all individual machines of the users. In cloud based gaming, the processing will take place in a server and it will communicate with the users system through the internet. Benefits will include reduced piracy, increased user base, platform independent gaming and scope for advertisement.

Hurdles include latency issues, resource sharing model at server level, video compression techniques etc. The present players in this field include Onlive, Gaikai and Otoy. As a gamer, the scope and potential of cloud based gaming really excites me. Imagine how great it would be if we could play our favorite games right from our mobiles and compete with players using various platforms like consoles or PC. The whole dynamics of games will change and they will cease to be a single player based games. The important thing will be collaboration between the various players.

Games will start involving a huge number of players at a same time like it happens in Massive multiplayer online role-playing game. We will no longer be bothered by upgrading of computers and inability to play games because our systems do not support them. All you have to do is to open your browser, and all the processing will be done in the clouds. References- 1. http://en. wikipedia. org/wiki/Video_game 2. http://www. theesa. com/facts/pdfs/ESA_EF_2009. pdf 3. http://www. grabstats. com/statcategorymain. asp? StatCatID=13 4. http://vgsales. wikia. com/wiki/Video_game_industry 5. http://www. canada. om/topics/technology/games/story. html? id=ae936f84-8def-457d-b07a-40099252278d 6. http://gamer. blorge. com/2010/06/07/video-game-piracy-costs-industry-41-billion/ 7. http://techcrunch. com/2010/09/21/200-million-people-are-playing-facebook-games/ 8. http://www. onlive. com/support/performance 9. http://www. gamasutra. com/view/news/30537/Opinion_Give_Cloud_Gaming_A_Chance. php 10. http://en. wikipedia. org/wiki/OnLive 11. http://en. wikipedia. org/wiki/Steve_Perlman ———————– Display Processor Game Software Input Device User Display Processor Program Input Device User