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Long read: The beauty and drama of video games and their clouds

"It's a little bit hard to work out without knowing the altitude of that dragon..."

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Is cloud gaming the future?

The death of the disc? We talk to Molyneux, Perry, Valve and more.

Is cloud gaming the future? Sony certainly thinks so. It forked out $380 million on Gaikai, the cloud gaming service run by David Perry, to ensure PlayStation's future at least incorporates the cloud. Expect cloud gaming to form a part of the offering of PlayStation 4, the next Xbox and, probably, everything else gaming related since now.

And the data suggests so, too. It's no secret that sales of boxed, retail games have declined steadily over the last few years, having peaked in 2008. All the major video game publishers are desperately trying to increase the amount of money they make from digital sales. EA, for example, recently said it is "inevitable" that it will go 100 per cent digital in the future.

But what do others think? As the quality of experience offered by cloud gaming companies improved, will physical media go the way of the dodo? Or will there always be a place for cold, hard discs? We talked to Peter Molyneux, Valve, David Perry and more to find out.

Peter Molyneux, founder, 22 Cans

If we were to go back 10 years, if I had said to you, one of the last mediums that really truly use discs are computer games...

I suspect if consumers had a choice in today's digitally connected world, most of them would choose a fast, reliable digital connection. That's just the reality of where the world's going. Does that mean every single game is going to be digitally distributed rather than at retail? No. There's a place for retail for gifts. But it's going to slowly transition over the next three years.

It will be very interesting when the next generation of hardware is finally announced. There must be a 'shall we, shall we not' going on in their mind. If they don't, that's a big overnight change. If they do leave it in there, I can see retail lasting a little bit longer.

Peter Molyneux.

But physical goods now, I don't know how many times I buy them at all. Mobile devices are getting consumers very used to dealing with interactive entertainment in a very immediate, digitally engaged way. Getting these consumers then to go back to their hardware systems and shove in this old Blu-ray disc, and tap their fingers while it installs, it feels like a step back. It doesn't feel like we're asking those consumers to learn something new by just digitally distributing games. It seems like we're asking them to do the very thing they do most of nowadays, which is digital.

You don't wait for things. Why should you wait for things? You don't get in the car and drive down to the shops for those sorts of things. That's why Blockbuster has gone and HMV is struggling with its identity. That's happened very, very fast.

I can understand the motivation for hardware manufacturers to have a disc. Retail has been a fantastic partner to publishers. Retail fork out enormous amounts of money in very predictable ways, and that's a great way to run a business. And it's a very hard thing to give up - that predictability. A lot of the businesses in this industry, their whole business model is defined around predicting how many units they're going to sell. It's all about their forecast. That's how they decide on what investments to make and how big the investment is.

Giving up retail and giving up that business model, that way of working they've worked with for tens of years, is an enormous body of work. I can understand how, if I was in their shoes, I'd want a hybrid solution. I'd want to cling on to the comfort blanket of retail for as long as I can.

I just wonder, purely as a consumer, when the rest of the world is educating consumers not to think of retail as a solution but to think of digital as a solution, where we're talking about multiple devices now, engaging with our experiences of many different places, I don't know where physical product fits into that. It doesn't quite fit into the cloud. It doesn't quite fit into this persistent thing or multi device. It doesn't fit into the way people consume other forms of entertainment. It just doesn't fit.

I'm sure they will include it. I'm not sure how many people will actually physically use it.

Jason Holtman, business development chief, Valve

Jason Holtman.

It might be. There might be functions people want in cloud gaming. It's interesting to watch that and see how it evolves. I'm from Valve. It's really hard to predict anything! We don't even predict things about our own future, much less other industries'. It's hard to tell if that's, quote unquote, the future or not. They are certainly talented folks. It's certainly got a lot of interest from people. It's got some interest from customers. It's interesting technology. But you have to wait and see.

Don't get us wrong, we think the idea of the cloud, things that can be on a server and can facilitate data moving up and down and between customers easily is super interesting. We use things like that. The Workshop is based on cloud. If you asked us, are your games cloud enabled, we'd say, absolutely. Portal 2 is a cloud enabled game because the cloud is making it possible to share puzzle makers around. Skyrim is a cloud enabled game because you can get mods off of the cloud. We think that's a super interesting application of cloud. That's how we're tackling what happens when you can go beyond the user's machine and use a network to provide functions. That's a wide open space. That's why I'm saying it's hard for me to predict. Everybody is looking at that space differently.

There are no near term plans for us to stream games through Steam.

Andrew Oliver, co-founder, Blitz Games Studios

It is a future. It is definitely a part of the future. It is getting very fragmented. Whatever game you make, you have to get it to everyone on every different device, and that's trouble. One of the ways you might want to see it is via some sort of interactive TV and the cloud.

The people who knock it always knock it on latency or lag or whatever. A lot of these things can be mitigated. People criticise lag, but Moore's law says it'll be halved and halved and halved, because it's all to do with processing speed. 15 years ago people said the internet was really cool, but it would never have twitch based games. You'd never do a shooter on the internet. Oh! That would be madness. Now, that's what everyone does.

Ian Livingstone, Eidos life president

There's a historical inevitability that we're going to move away from set-top boxes to total digital delivery of content. It's just the way the world is going. Every entertainment medium is changing in a similar way and you can't stand in the way of progress. You have to adapt and take on board what's happening or suffer the consequences. We have to embrace it and get on with it.

Physical media will still exist in the short term, but the consoles of tomorrow might be nothing more than technology inside a smart TV. It's very difficult to predict exactly what's going to happen, but you do know where the world is going.

David Perry, boss of Gaikai, now owned by Sony Computer Entertainment

I did a demonstration in Los Angeles that I thought was a really good sign of where it was going. There is a publisher in Santa Monica and I demonstrated in their offices their games running. But our data centre was in Los Angeles, and from Santa Monica to Los Angeles was two-and-a-half milliseconds. So all I needed for network time was two-and-a-half milliseconds to get from one to the other. To get two-and-a-half milliseconds out of the cloud is no big deal at all. You could see the potential as we add more cities and add more data centres.

David Perry.

BioWare is based in Edmonton, Canada. And I wanted BioWare to get a great experience. So we put some servers in Edmonton. It turns out, Edmonton was one tenth of the cost of San Francisco to host the servers. We went, oh my god, do you realise we just improved their experience to just a few milliseconds of delay and yet our costs went down? So their experience went up and our costs went down. The more viral we go, the cheaper the service gets and the higher the quality, which is a bit of a head slapping moment when you think about it.

You can see why cloud gaming isn't so crazy. And then, if you think about where this is going, which is offering more power in the cloud, if you're able to have more power in the cloud than you have locally, at some point you're going to see a game you can't experience locally because you don't have the hardware to do it - or 99 per cent of the world wouldn't want to buy that much hardware. When you see that, you're going to want to play that. That's who we are as gamers. We go, whoa! That looks incredible. Oh, that doesn't run locally. You have to run it from the cloud.

For me, that would be the moment when the break comes, when cloud gaming will really hit its knee in the curb.