Head in the Cloud

Really good. We have this really weird situation we found ourselves in where the only way you can place your video game on a retailer's website is through us. We found ourselves at the right place at the right moment because that's very interesting to retailers, so we've been doing a lot of work with different retailers, getting them ready for launch as well. It's going to be a very interesting next 6 months, because you don't want to be the retailer that doesn't have video games on your site if you think about it. If the others do it and you don't that's not so good. So we're trying to work that out, right now I have to say it's keeping us insanely busy trying to keep up with it.

Starting with Walmart, being the number one retailer in the world, that's helped a lot. That's definitely helped a lot. There's a lot more games that will keep popping up on Walmart. We have a new server you see that hasn't been released yet, it's actually working in closed beta test, but very soon that new server is going to be turned on and you'll see those new games appearing on Walmart.

Yep, including Europe too.

I would say almost all of the major publishers are actually in contracts with us right now, so we're making very good progress with them. Again it's a strange situation, it's kind of surprising but the only way you can place your videogame on your own website is through us, there's no other way to do it.

I keep getting asked "will you come and sponsor this, will you do this marketing thing" and I'm like I really don't need any more business right now. We're having a hell of a time trying to keep up with the current agreements we're trying to scale. We have 3 different attorney firms working for us just on agreements right now, so it's been very difficult to handle it all. But it's coming along very nicely. The core is the important thing which is people want to be able to put the games where their gamers are and so Gaikai is the only way to do that right now.

It's a tough one because this is a VC backed company and the way that works is the money that you raise and the money that the company makes goes to grow the value of the company. I've been on the other side of it where it's your company but this is me running a large company with very large investors investing into it. My point is that the challenge here is to grow the value of the company for everyone, and that's a fun situation. The companies that we have backing us are some of the highest, most respected VCs in Silicon Valley.

There is one obstacle which is that we want to be able to serve 100 per cent of people, and this is something we realised over a year ago, we realised that there was this problem with we wanted to have 100 per cent, and the only way to get to 100 per cent is that there's some people that don't have a good internet connection or that are too far away from our servers. We have to have a solution for them too. So we built a second technology to pick up those people and it gets the game running as fast as possible for them. So the thing that we're trying to really solve in the game industry is discovering something true to playing it or having it delivered to your computer and Gaikai is the fastest way to do that. And that is something that is also in closed beta right now. So that you'll get to see pretty soon. The concept there is just insanely fast downloads from your browser, your web browser delivering games to the user.

We did that for two reasons. One is that we wanted to be able to let everybody play, and number two is if somebody decides to buy the game or download the MMO, we have to have the fastest way to get it to them. And that's what we've built.

It's a bigger concept actually, the long tail for business? And most of the stuff down the long tail is the old stuff or the stuff that didn't sell too well, and then you've got the stuff at the high end of the tail where all the business is happening. In this kind of space that's where we're focussed. We're focussed on the piece of the curve where all the action is. So that's very much forced us to think about how to get the fastest streaming possible, so then you get into to a whole discussion of how technically to do that. The farther things have to travel, and the more equipment they have to travel through, the slower the connection. So every time you press the fire key or the jump key, if that key has to cross maybe two states to a server and then come back two states with the answer, then that's four states are being crossed every single time you press the jump key. And that's pretty painful mathematically. So we found that by moving the server two states closer it's actually the equivalent of moving it four states closer, and that's a big deal.

So we've really put a huge amount of energy into that, and we actually just signed a new hosting agreement to add even more data centres, so to some extent we're almost spreading virally across data centres. And the idea being that whenever people play they'll have insanely fast connection times. I just did a demonstration yesterday for a publisher and we had a one and half millisecond ping. So a one and half millisecond round trip from their office to our data centre, and that's so small, a thousandth of a second. We're talking about such small amounts of time that it becomes irrelevant. So that's what we're trying to get to, that some day for all gamers, not necessarily one and a half milliseconds because that's incredible, but such small pings that it just doesn't matter.

In our office we have Street Fighter running at 60 fps, multiplayer. So there's no question that it can be done. The thing that people didn't realise, I mean it sounds challenging but if you think about it we have currently 75 people who come into the office every day, working on all kinds of technology and solutions to try and make this feel even better. And we have a road map still, of many ideas to keep implementing that will shave off another millisecond here, another millisecond there, and it's that relentless pursuit of it that makes the whole thing a little more interesting. I have no question that in a few years time it'll start to feel like the games are in the room.

We don't think we're a threat to console. I think the threat to consoles is actually Apple. I think the concern there is that they're generating hardware so quickly now. If you're creating and shipping new hardware every 12 months, and during that 12 months you're also giving pretty impressive upgrades, the features that people want, and you're giving them those every 6 months and hardware every 12 months, I think the idea that you would have five to seven years on hardware refreshes is becoming a technical problem. So I honestly don't think we're a challenge at all for the consoles, I just think the consoles are different. The world is changing.

Another example of that is the handhelds. I think the handhelds are getting challenged very aggressively by the mobile phones. I find myself spending a lot of money on iPhone, and if you look at a handheld today, the one's that people keep making, they still make them as a gaming machine – I was at a speech and there was this guy, Ken Robinson, and he asked how many people in the audience wear wristwatches, and he said when you talk to younger kids today, most of them don't have wristwatches, and the reason is they only do one thing. And they don't want to carry anything that just does one thing. They carry their phone and it does everything. And so if you make single function devices, then you've got a problem. That's my concern for handhelds, is this single function side of it.

Consoles are trying to change as quickly as they can to become entertainment devices, and everyone is saying "you can play your music on it" and "you can watch movies on it" and that entertainment device strategy is the way to save consoles. For handhelds that's a really hard thing to do. I know they're adding Netflix and stuff, but they really need to be that sort of multifunction device to survive. And if you think about it, that ultimately turns them into cellphones. So I don't think cloud gaming is their problem.

I mean I just find myself impulse purchasing because they keep the prices down. If the iPhone games were $60 each, or £60 in the UK? So Imagine your iPhone games were £60 each, you'd be hesitating all the time. But when it's £2 or whatever then you're like "OK" and you click on it, and now that microtransactions have kicked in, there's a game I've recently spent $90 on, there's another game I spent $70 on. And I'm a big fan of that idea, you only pay for the games you love. So you fall in love with a game, and you spend a bunch of money in it, no harm no foul.