brucewaynegretzky
Member
http://www.bloomberg.com/news/2012-09-25/xbox-challenged-as-cable-plots-to-make-consoles-obsolete.html
I only saw one post about this in my search. Seems like a pretty big deal. I'd be all for it if I trusted cable companies to price it fairly and provide a competent service. I have no faith that will actually happen though....
I only saw one post about this in my search. Seems like a pretty big deal. I'd be all for it if I trusted cable companies to price it fairly and provide a competent service. I have no faith that will actually happen though....
Xbox Challenged as Cable Plots to Make Consoles Obsolete
By Ari Levy - Sep 25, 2012
AT&T Inc. (T), Verizon Communications Inc. (VZ) and Time Warner Cable Inc. (TWC) are gearing up for a push to deliver video games directly to televisions, said people with knowledge of the matter, a strategy shift that poses a threat to traditional consoles such as the PlayStation, Wii and Xbox.
Trials of cloud-gaming services are likely to start later this year so carriers can test and tweak the technology before wider deployments that may begin as early as 2013, said the people, who asked not to be named because the discussions are private. Other carriers are aiming for 2014, the people said.
If successful, Web-based games could accelerate a shift away from consoles, the industry’s main money maker for the past three decades. Sony Corp. (6758), Microsoft Corp. (MSFT) and Nintendo Co. have helped to build a market worth $24.1 billion in the U.S. in 2011, according to NPD Group Inc. Consumers are already dumping consoles in favor of games on smartphones and tablets, leading to a 39 percent decline in video-game hardware sales last month from a year earlier.
“Everybody has a TV,” said Atul Bagga, a video-games analyst at Lazard Capital Markets in San Francisco. Cable and phone companies are “looking for new ways to monetize their users and gaming can be pretty compelling,” he said.
By adding popular games to their TV, Internet and phone packages, carriers can offer another service to their almost 50 million digital TV subscribers.
Real Time
In addition to AT&T, Verizon and Time Warner Cable, Comcast Corp. (CMCSA) and Cox Communications Inc. are also in talks to offer video-gaming services, the people said. They’re all looking to go beyond social games from Zynga Inc. (ZNGA) and casual games such as “Tetris” and “Solitaire,” with technology that can deliver the most advanced action games from top publishers such as Electronic Arts Inc. (EA)
For technology, the carriers are turning to startups such as Playcast Media Systems, CiiNOW Inc. and Agawi Inc., which provide software to speed delivery of real-time gaming. Executives at each of those companies acknowledged that they’re in talks with U.S. carriers, declining to say which ones.
Alex Dudley, a spokesman for Time Warner Cable, which had 12.3 million subscribers as of mid-2012, and Jennifer Khoury, a spokeswoman for Comcast, which had 22.1 million subscribers, declined to comment.
Jan Rasmussen, a spokeswoman for AT&T, said in a statement the company is “exploring unique ways to offer cloud gaming services to our TV and broadband customers.” AT&T had 4.15 million subscribers for its U-verse TV services as of June.
Console Model
Deidre Hart, a spokeswoman for Verizon, said that while the company has the capability, it doesn’t currently “offer anything regarding HD cloud gaming.” Shana Keith, a spokeswoman for Cox, said the company is exploring a number of cloud-based broadband services, declining to provide specifics.
Verizon had 4.47 million TV subscribers, while Cox had 4.66 million, according to the National Cable & Telecommunications Association.
With cloud gaming, consumers will be able to avoid buying Sony’s PlayStation 3, Microsoft’s Xbox 360 or Nintendo’s Wii, and play using generic controllers connected to their set-top box or TV. Some carriers are looking at software that turns smartphones into controllers, the people said.
Wider cloud-gaming adoption would be a significant shift from the console business model pioneered by Atari Inc. in the ’70s and advanced by Nintendo in the ’80s -- selling machines at a slim profit or loss and making money on royalties from game cartridges or discs.
Jigsaw Puzzle
Manufacturers have built online accounts and data centers for current console subscribers in order to offer games, interactive environments and prepare for networked gaming. Xbox Live, Microsoft’s online service, lets gamers play together, buy games and use other devices.
Carriers still have to get the technology in place. To stream games from remote servers to multiple devices simultaneously, they need to license virtualization technology. And to make the experience comparable to that of a console, they also must incorporate powerful graphics processors into their data centers, replacing chips used in consoles.
Putting all those pieces together proved too difficult for OnLive Inc., a startup backed by units of AT&T and Time Warner Inc., which went through a restructuring last month after failing to attract enough $9.99-a-month subscribers to its cloud-gaming system. Gaikai Inc., a competitor in the market, agreed to be bought earlier this year by Sony for $380 million.
Execution Challenge
Large service providers have an advantage because they have deeper pockets, big data centers and an existing subscriber base. Still, delivering a cloud service with the same quality as game consoles and creating a profitable business will be a challenge, said Mitch Lasky, a partner at venture firm Benchmark Capital in Menlo Park, California, and an early investor in Gaikai.
“It makes perfect sense why they would want to go after this market,” said Lasky, who was previously an executive at Electronic Arts. “Streaming games use a ton of bandwidth and really benefit from good networks. But it’s a gnarly execution problem they’re trying to solve.”
Nvidia Corp., a maker of graphics processors, has been building technology for data-centers and said earlier this year that it’s working on implementing it in a way that game service providers can use. The company is making a big bet on cloud gaming, said Tony Tamasi, a senior vice president.
“It’s a substantial investment of both hardware and software,” said Tamasi, though he declined to name the company’s partners. “We’ve put stuff into our chips specifically to enable this kind of functionality.”
Stream Games
For game publishers, cloud gaming makes sense because they can develop for a single platform rather than for each of the various consoles, which costs more money. Frank Gibeau, president of Electronic Arts Labels, said games via Web-based TV will eventually be a “big opportunity,” without giving a time frame.
While networks in the U.S. are preparing for cloud gaming, services have already emerged in other countries, including Portugal, France, Singapore and South Korea. Playcast, based in Israel, has partnered with carriers in each of those countries to stream games to set-top boxes and televisions.
In July, Playcast announced a deal with South Korea’s CJ Hellovision to make a gaming service available to the cable operator’s 3.51 million subscribers. Last year, Playcast partnered with Singapore Telecommunications Ltd. (ST) for a S$9.99 ($8) a month subscription service that included titles from Activision Blizzard Inc. (ATVI) and Atari.
CiiNOW, based in Mountain View, California, is about to begin its fourth European trial, though Chief Executive Officer Ron Haberman declined to name the carriers. U.S. cable and phone companies need to catch up, he said.
“If there was ever a service that fit network providers, it’s this one,” Haberman said. “2013 is going to be when we see big commercial offerings.”
