Last time I blogged on cloud gaming, I was writing about a company called OnLive. They basically run games in server farms while the user streams the video remotely and inputs commands from their terminal (PC, tablet, phone, TV, etc) thus eliminating the need for expensive hardware and having the game installed locally.  Well, here is how things have evolved ever since.

OnLive struggled to get enough subscribers and it has recently undergone some changes (bought by an investor, halved the number of staff, etc).  Gaikai, which was pretty much the main competitor, has been bought by Sony.

Not the best of starts for cloud gaming, you might agree.  However, keep your eyes out for these 3 companies: Playcast Media Systems, CiiNOW Inc. and Agawi Inc

They basically offer cloud gaming solutions, so what’s different about these? Well, the whole business model. While OnLive marketed to consumers directly, these companies, according to Bloomberg, are taking a whole different approach. They will be selling their solutions to huge communication providers (and I do mean huge – Verizon, AT&T, Time Warner Cable, Comcast Corporation and Cox Communications). Why? Well of course because they have the entire infrastructure in place and they are already present in the homes of millions of customers. Adding cloud gaming to set-top boxes or smart TVs is like a gold rush waiting to happen. Just add a controller, “tune in” to the right channel and away you go. Games run on servers, you play from home. Just like pay per view. No console, no PC, no game download or CD needed. Latest titles instantly playable.

Couple all this news with Nvidia’s focus on cloud based GPUs (graphics processing units) used in Gaikai as well as AMD’s response by investing in CiiNOW and I think it’s safe to say the revolution is about to be televised (or should I say streamed?). Note:  for those of you that don’t know, Nvidia and AMD are pretty much battling it out in the PC graphics board market.

What does this mean? Well, it could be quite a few things…. Consoles sales declining (they already are, due to tablets and smartphones), PC hardware may also be hit, the way games are published and sold will have to change, and we’ll probably see even more growth in the games market due to increased accessibility. If gaming will be there on the TV just like another regular TV channel, how many more of the couch surfers will become casual gamers when “there’s nothing to watch on telly?” I’ve got my research hat on, waiting for this story to unravel – wondering whether the ripple effect might turn into a tidal wave.

Taking a step back and looking at the business behind it, will it not be interesting to see the 2 different approaches unfold (direct to consumers vs integrating the solution within an existing, established provider’s offering)? We know very well from our work that identical products can behave very differently based on the way they are delivered to the market. This is a prime example of similar products as far as the consumer is concerned but executed via different channels. Definitely one to keep an eye on.