A
growing number of consumers have turned to video game consoles for more than games.
Streaming video services such as Netflix and Amazon Prime form an increasingly
important component of a game console's value proposition (which is why
Nintendo made a big splash for their new
TVii feature on the forthcoming Wii U).
Even
cable companies have gotten into the act, creating apps that enable
an Xbox to serve as a set-top box for secondary screens in a subscriber's home.
It's a marriage that would seem to redound to everyone's benefit - console
makers get added functionality and cement their toe-hold in the living room as
the device of choice tethered to the TV; pay TV firms get the cost savings from
not having to service additional cable boxes.
Yet
with pay TV subscription rates at saturation levels in the U.S., there's a huge
hunger for additional growth opportunities. Some providers, such as Verizon and
AT&T, have been dabbling in
home security and home automation as a way to mine additional dollars from
their subscriber base. But more - apparently many more - are looking to gaming as
well.
According
to a recent report in Bloomberg, most of the
major cable and IPTV providers have been actively exploring a cloud gaming
option to serve up to subscribers:
In addition to AT&T, Verizon and Time
Warner Cable, Comcast 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. 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.
Cloud
gaming - like anything with "cloud" preceding it - is a hot topic and
pay TV providers will find that they're not alone in pursuing the lucrative
gaming dollar. Samsung has announced plans to integrate cloud-based gaming into several of
its HDTVs, while Sony earlier this year scooped up cloud gaming service Gaikai to bolster its own
gaming portfolio.
Moreover,
the addition of gaming services, while certainly attractive from a revenue
perspective, adds a new layer of capital costs. With many networks instituting
data usage caps to contain the growth of over-the-top video, online gaming
would represent another bandwidth-intensive service vying for space in the
pipeline.
Nonetheless,
it's clear that interest in, and the infrastructure for, cloud gaming is
growing. Chip-maker NVIDIA has already indicated that its GPU
chips are finding a home in more and more data center servers. All that's
missing, as of today, is a proven business model (perhaps the biggest name in
cloud gaming, OnLive, has skirted - rather ignominiously - with
financial ruin).
