Video Game Streaming: Bridge To The Future, Or One Too Far?

UPDATE 08/17/12: Illustrating the difficulties facing gaming as a service and streaming games in general, it has been confirmed that OnLive has laid off its entire staff. No word on whether the company will remain in business, or in what form it would do so. Our developing coverage of the situation can be found here.

Piracy, we will admit, poses an enormous dilemma for the gaming industry. Depending on who you talk to, potentially millions of dollars are lost each year to people who steal and then illegally distribute IP. Clearly, the industry needs to present a serious, unified response if it expects to get the matter under control. Of course, getting the problem under control poses its own set of unique problems, perhaps the most important being the need to balance protecting intellectual property against the needs of the consumers you want purchasing said property.

While some companies, notably CD Projekt Red, have rejected the premise outright, the majority of major developers have all began to implement anti-piracy measures centered largely around convoluted digital rights management schemes, such as Blizzard’s persistent Internet requirement for Diablo 3, and services like Origin. However, the growing consensus among the big names is the idea that very soon, perhaps even before the next generation of consoles gets underway, there is going to be a tremendous shift to a fully digital marketplace for games. The most commonly bandied around phrase is ‘gaming as a service’, essentially the idea that netflix is the model the video gaming industry should emulate.

With gaming as a service, players would no longer purchase a physical or digital copy of a game outright. Instead, so proponents believe, the customer will buy access; either to a single game, or to several, and stream them via the Internet. During an interview at QuakeCon 2012, id Software’s Tim Willits even proclaimed this to be the future of the industry, insisted upon its inevitability, and confidently assumed the customer will more or less happily adopt the model. Is this an accurate reading of the gamer community? To find out, we’ve taken a look at the facts on the ground for the average consumer, and the evidence suggests otherwise. While streaming will become a major component of the industry, given financial and technical realities, the outright ownership of individual copies of a game will remain the norm for the foreseeable future.

One first must consider the financial reality. Whenever the discussion of streaming gaming comes up, those advocating most strongly for it tend to assume that Internet access is a given. But is it? Before answering that question, we ought to consider other costs the consumer accumulates as a result of simply living in our society. The Bureau of Labor Statistics puts average yearly expenses of just being an American at around 25K. A breakdown of some of these expenses demonstrates why:

* Water, power, gas. Depending on where you live, you might end up paying between 100 and 300 dollars every other month just to ensure access to these necessities.

* Rent. This varies wildly. The average rent in Los Angeles is $1628. The average in Tulsa, meanwhile, is $515. But take into account the variance in income by region. In LA, median income is around $55,476; in Tulsa, it’s $29,000. At least 50% of both populations make less of course, making rent a dicier prospect than it would seem from a surface glance.

* Insurance. If you drive – and most Americans do – then you almost certainly have auto insurance. As with rents, insurance prices vary widely, based on location, driver history and even credit (which, by the way, is an awful thing to do to people.) But chances are, even with liability, you’re going to be kicking in somewhere between $40 and $100 per month just to keep your car legal.

* Phone. Research from 2011 suggests the average American is forking over $47 per month for their cell phones. And unlike power, insurance, and rental costs, cell phone rates tend to be consistent nationwide. Whatever your paying for your cell phone service in New York, you’re likely to pay the same rate in De Moines.

These are the costs consumers are almost certainly taking care of before they can consider getting the cable and Internet needed to stream games. Of course, at first glance it doesn’t seem like much to shell out. AT&T standard DSL can cost as little as 20 bucks a month. Uverse is pricier at $59.95 a month, but still reasonable (assuming you live where service is available). Time Warner’s standard package is $29.95 per month, while Cox bundles Internet with cable service at around $40 bucks a month depending on the offer you purchase. All quite reasonable, and the data certainly confirms that most Americans have some kind of access to the Internet. But after shelling out so much for everything else, it’s no wonder so many Americans still get their Internet via work or school. (We’ll talk about those numbers in greater detail shortly).

But, OK, let’s assume the customer’s ability or willingness to shell out money for an Internet connection is secure. There’s an additional problem, namely a litany of additional costs, both up front and ongoing, required of people who want to play video games at home.

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22 Comments on Video Game Streaming: Bridge To The Future, Or One Too Far?

Swcloud99

On August 15, 2012 at 11:59 am

It would honestly be the biggest catastrophe to ever hit gaming. I spend a lot of time gaming. It’s something I can’t really see my life without but if they do shift the model that way, I would lose the want to desire to play at all.
I don’t want to pay to be able to stream a game and then feel pressured to play that game lest I lose it. I bought KH: BBS a year ago, I am only just playing it now. I very much intend to play it again a few years from now (literally a few years from now). I am currently also playing Final Fantasy VII. I have had that game for years. I have played it through a few times. It is not the only one. I still the games I bought years ago. I want to be able to do that. In a world where the product is not mine, I am limited in the times I will be able to play the game.
I can’t even conceive of the idea. It is the worse thing I have ever heard. F**k those people.

Name*

On August 15, 2012 at 12:28 pm

Shout out for Tulsa! Thanks for mentioning us in a non-stereotypical way.

As for the OP, in Tulsa I would probably be able to buy into this service without being throttled. PROBABLY being the important part, as I’m not sure about it. And Tulsa is larger than most people think, being in the top 50 cities population wise in the country. And if I’m not sure about being able to have videogames as a service, I can imagine quite a few gamers who live in rural areas not being able to play, and the publishers losing a LOT of money.

Menthro

On August 15, 2012 at 1:58 pm

…..I think if they tried this, especially in this current climate of Gamers rising up, this would cause a true revolution. I mean we tolerate, and I do mean tolerate, current anti-piracy measures, cause let’s be honest here if you WANT to play Diablo 3 for free you can, if they tried to do something even MORE intrusive the Internet would be up in arms and the publishers would be in flames. Piracy wouldn’t be about getting things for free anymore it would be about fighting the power, it would be about giving them nothing and taking from them everything. Be warned publishers, we are prepared to fight! Are you?

JawaEsteban

On August 15, 2012 at 2:07 pm

Great article, Ross. I think I commented on this issue a little while back, and you’ve knocked it out of the park. Putting costs aside (and that’s far from an insignificant issue), the real nail in the coffin of this stupid, stupid idea is (as you have pointed out) that the broadband infrastructure needed to support it simply does not exist. Furthermore, the infrastructure improvements needed are at best several decades out. Probably farther, actually.
The national carriers don’t upgrade their networks out of charity, because the costs to do so are astronomical. They do it if and only if they think they can turn a profit from the increased data throughput. Now, it’s probably fair to say that the overwhelming majority of Americans have cellular phones. The size of that customer base makes upgrading the national data network to support cell phone-level data throughput a reasonable expense, and the carriers have for the most part done so. However, if the boys over at id software think that the overwhelming majority (and it would have to be a HUGE percentage to justify the cost) of Americans are serious gamers….then I want the name of their pharmacist.
I’ll venture a guess that if gaming went to a digital streaming model tomorrow, only a third of the current gaming community would have access to a reliable internet connection fast enough to support it. That’s probably being overly generous, but we’re going for simplicity here. You know what happens to businesses that suddenly lose 2/3 of their customers?
They go bankrupt. You can’t increase prices to cover the loss of that many customers, because the level you’d have to go to would be, well……you show me someone willing to shell out $150+ dollars for a computer game, and I’ll show you a Kardashian.
In short, Tim Willits may be very talented at creating computer games, but otherwise he is a *#ing moron.

R.J.

On August 15, 2012 at 2:29 pm

Ross hits exactly why this idea is currently not doable and why it would be just plain bad if it was doable. I’m especially reluctant to add another recurring expense on top of what I have, and while I have a connection that could handle it, it’s not like that is the norm. It would be so very annoying to have to maintain separate subscriptions for everything I play. Sure, some publishers could offer a rate that lets you play many or all of their games, but what if I only want to play one? I tend to buy a game based on the game itself, not who makes it, so that isn’t that great of an option. And like all subscriptions, what if I’m not using it? Unless I’m playing every month, I’m wasting money. Like Swcloud said above, I have one game that I bought months ago, but I still haven’t gotten around to playing it, and I’m busy replaying all the Uncharted games. Under the subscription model, I’d be wasting money.

Tiagonal, chamán de la lluvia

On August 15, 2012 at 5:26 pm

It is indeed a dreadful panorama for CloudGaming.

Still, it doesn’t matter. I’ve embraced the cloud. I’ve resigned to all my costumer entitlements of ownership, either through EULA’s or subscription-fees. I’ve resigned my gaming to my ISP, knowing that I’m with it because I rely on it. I’ve resigned my ownership, I’ve resigned my confidence on save-states. And I’ve resigned…

All because I know the Cloud could take me BEYOND gaming!, evolution of graphics I don’t have to care for, but live through. Network gaming is now given as right. I can play anywhere, whenever I want. I just play, that’s it.. plain and simple just play. It’s perhaps the most evil and profitable way they’ve found… But regardless of it, I’m there…

I’ve embrased the power of OnLive’s ring. I’ve followed all directions it wanted me to, I’ve seen the lag come to an end, I’ve seen the 4Mb to 2Mb drop. I’ve seen the impossible every time I log in. I’m in Colombia, Southamerica. And I’ve been login in to OnLive for 2 years now. And not only me, but hundreds of compatriots..

CloudGaming, Evolution of Gaming is not possible at this age in the console flooded market of United States of America, a flood that has actually drought and resent the industry… Too much entitlement, selfishness and narrow views. Specially way too much entitlement, fearful to resign to rights fictionally carved. Fearful to shift their minds to go beyond. Fearful to get caugh by evil corporate systems where greed reigns. And the same entitlement, selfishness and narrow views have empowered those corporations.

Clouds are indeed dark and twisted, and are comming from many different directions. But they also hold the most powerful energy discharges, and thus the secrets to raw gaming power.

Just try it. Feel the power of OnLive’s ring, get caught by GaiKai’s Fang, contemplate the edge of the Kusanagi, see yourself into the GFace. Prepare for the intense storm that’s comming, prepare to give up your rights, perpare to give yourself to gaming.

Disappointed J

On August 15, 2012 at 6:05 pm

I’ve taught in a Title 1 school in a Midwestern city. Most of my students did not have internet access at home. Many of my students did have game consoles. If gaming went streaming, they would no longer be customers.

Gamer41

On August 15, 2012 at 6:58 pm

I always get a hard copy of the games I buy.it works and should not be abandon.

Evernessince

On August 15, 2012 at 7:21 pm

“A PC is, at minimum, a $500 investment. And that’s assuming you want a pathetic rig that can barely handle MS Word”

When was the last time you built a budget PC? The min. is $300 and is MORE than capable of easily handling MS word.

Ross Lincoln

On August 16, 2012 at 8:01 am

Evernessince, when I budgeted my gaming PC, I already had a monitor and certain critical software. Despite that, the minimum required to make it possible for me to play most current release games with some leeway was around $700. As for the joke about MS Word, it was a joke. An obscure literary technique known as hyperbole.

James

On August 16, 2012 at 3:08 pm

Unless there is robust protection against lost of access, I don’t see it taking off.

People want to mod their games, play it how they see fit. There is a reason we are PC games and not console gamers.

Evernessince

On August 18, 2012 at 10:13 am

Do you always insult your readers ross? I can see how you can become a great writer, by trolling your own articles. Also I don’t know what “deals” your getting with parts, but a $300 fusion system(including OS) is more than capable of playing games. You make it seems like being a PC gamer is expensive because you probably never had to worry about cost.

Mr Trem

On August 18, 2012 at 10:17 am

Evernessince – nobody’s ‘trolling’ except you. Ross simply answered your question and pointed out something that was obvious to 99% of his readers, but not to you. If you don’t like his tone, then the solution is to not be a complete idiot in future. Cheers.

Evernessince

On August 18, 2012 at 7:18 pm

yeah because nothing has never been misinterpreted before, and his writing style is all of a sudden apparently coherent to 99% of his readers. Oh and does labeling others make you feel better because you take his work for law? Excuse me for pointing out things I found distasteful in the article and that the author’s reaction was quite torrid to my comment. As I am an MS Office master, it is particularly offensive.

On a side note, why am I an idiot? For asking a questions and getting a sour response? Or for reading the article and thinking too critically on the one part, in which I felt offended. Tell me, which creates the fool of me.

Ross Lincoln

On August 19, 2012 at 10:13 am

Evernessince, I wasn’t trying to troll you even if, admittedly, I was indulging in a little irony at your expense. However, my statement about MS Word was indeed a joke, one I feel should have been apparent. If it wasn’t, I promise that in fact, I was joking.

To clarify further, this is a site dedicated first and formost (but not solely) to PC gaming. And as you surely know, the needs of an office computer are vastly different from the needs of a gaming PC. You do not, for instance, need to shell out several hundred bucks or more for a GPU to run MS Office. You also don’t need to invest in a high res monitor that can make the effort of investing in an expensive GPU worth your while. You just don’t.

I wasn’t dissing office work or Microsoft’s suite of office software, I was making the point that you need to shell out real money to play real games on your PC.

However, if you were able to put together a rig capable of playing Borderlands 2 for only 300 dollars, that is astonishing and I would sincerely invite you to share how you did it. We would love to tell our readers about it.

Evernessince

On August 19, 2012 at 2:42 pm

Thanks for clearing that up Ross, as I was a bit cross with you as well. Bad day at work and all. Anyways, the $300 dollar PC I was talking about would be able to run borderlands 2 on low but there are a few catches:

1) You must already have a keyboard, mouse, and monitor
2) You have to know somebody at an IT college to get windows for $10
3) Deal hunting really saves you allot of money. Spending an hour just on looking for flash sales over the internet drastically cuts down on the price.

Usually I am able to get AMD A8 processors. Very good price/performance.

Kaitlyn

On August 19, 2012 at 6:18 pm

The idea of a purely streamed-game environment, especially to be developed before the next generation of consoles, if ever, is so ridiculous I have a hard time taking it seriously. To be honest, I am not entirely versed in exactly what has been said is to be expected, but even disregarding all your wonderful research into how the internet and access to it can provide a nearly insurmountable roadblock to the endeavor in and of itself, at least in the near future, I just can’t see it becoming a reality any time soon from an economic perspective.

I can understand a shift towards the digital. People purchasing things online has become more and more common place, and it is not unreasonable to expect that a good number of people may gravitate towards purchasing and downloading games digitally. But doing so, they still “own” the game, once downloaded the internet is not required to play. I can see why some might suggest, not unreasonably, that there will be a shift towards digital media.

Take for instance books (as a quick analogy.) In the last few years, there has been a growing shift towards the digital. Not to say that digital books have or will surpass physical ones, but they have grown more popular. Personally, I like physical media, actually owning a hard copy I can hold in my hands (whether book or game), but there is something to be said for the convenience of the digital. (It doesn’t take up space, it’s fast and fairly easy to get, no need to worry over shipping costs or delays, and so on.) I have recently invested in a nook, and I find I do enjoy it for some things. For someone who goes through books like cookies and who could already fill multiple bookshelves with the books I own, there is something to be said for the convenient space a nook occupies.

Despite the rising popularity of digital books, however, I doubt that anytime in the near future, if ever in the foreseeable future, there will ever not be physical books. There will likely always be consumer demand for them, and short of every tree on the planet spontaneously dying, there is not likely to be any shortage of paper. I personally think the same goes for games. There will likely always, if not for at least a considerable time into the future, be demand for physical games. And they are not that expensive to make. As you said Moore said, “We will never abandon physical media,” he said. “As long as the consumer wants to buy something on a disc, we will be there to offer it.” It’s simple economics. As long as there’s demand, companies should supply it.

As to “The most commonly bandied around phrase is ‘gaming as a service’, essentially the idea that netflix is the model the video gaming industry should emulate,” that seems like a big red flag for me. Netflix hasn’t been doing so successfully lately. As you mentioned, not only is it expensive to get the computer and internet access required to initiate such a system, but the extra costs of such a service would definitely be pushing most people’s perception of the acceptable. Netflix did well until high licencsing costs required them splitting Dvd’s and streaming into two separate supscription fees. After that, they lost a lot of their consumers. Not that they’re entirely at fault, being effectively strangled by licensing costs. Which I also think would prove just as strangulating for any sort of similar video game streaming service. (Perhaps not, I admittedly am not exactly sure how that would work.)

I think it all comes down to what you mentioned at the end, in that “It would be best, we think, that the industry instead focus on how to make people more willing to pay for their products rather than making the purchase as restrictive and inconvenient as possible.” Supply and demand. It just doesn’t make sense for them to supply something that gamers aren’t demanding, and in fact would probably cripple most gamers.

David

On August 20, 2012 at 4:01 pm

Heh. Nice to see that everything that’s old is new again. The subscription model is, after all, what those of us old enough to remember when Big Iron Ruled The Earth had to put up with: being at the complete mercy of computer companies that charged you for the hardware, and also for the operating system and the software, on a proprietary and non-competitive basis.

Of course, a subscription model *could* be a plus if it were properly implemented. I’m thinking of the Stardock Software Gaming Network from back in the 1990s, where–for a fixed annual subscription fee–you had the right to any–any!–game they put on the network during your subscription period.

And the games were yours to keep: if you decided to drop your sub, you could still fully use the games you’d previously acquired (or that were available during your sub): you just lost access to any *new* games.

Now if any game company wants to offer a model like that…well…!

sep

On August 22, 2012 at 4:49 am

Ill buy anything cdprojekt makes. Ill pirate the crap outta everything else.

Deal with it.

Zach

On August 25, 2012 at 6:10 am

The bandwidth limit, also called spectrum crunch, will likely occur in between 2014 and 2016.

This is the absolute maximum amount of data we will be able to ever transmit into the open air.

It’s not some silly conspiracy or idea, it is a very real limit we have to the actual physical space we can transmit data into and the media industries at large are running head long into it without a care.

When we hit this crunch, limiting access to bandwidth will become a hell of a lot stricter and we can kiss cloud streaming goodbye {I’m actually thankful for that in a way}.

I really wish more people were willing to learn about this since it’s a really serious issue for the games industry as a whole and is going to rear it’s ugly head in a few years.

quicktooth

On October 25, 2012 at 2:59 am

I would never get this “games as service”. My internet is capped at 200 gigs up and down combined a month. I could NEVER afford to play as many hours as I do now on the scam that’s being proposed. Not to mention I don’t NEED to. We already get UNLIMITED HOURS for the low low cost of a flat dollar fee. In some cases, that can be as low as only a couple of dollars for a really old or indie game. We have NO INCENTIVE AT ALL to change to pay per minute or whatever service. I underscore: IF SOMEONE ADOPTS THIS PROPOSED PRICING MODEL THEY WILL GO OUT OF BUISNESS. Because EVERYONE ELSE, for thirty years, has been offering better value. We have no reason to change. Unless draconian (and pointless) laws are put in place DEMANDING we obey this baffling pricing structure, I can’t see how anyone would ever subscribe to it.

Alex

On May 3, 2013 at 6:35 am

I’d stop playing video games. I don’t spend enough time on it to make it worthwhile, particularly single player games which I usually play through once, or very occasionally twice. Same reason why I don’t use Netflix; I don’t watch movies enough to justify it on top of a premium cable subscription.

That said though, this is my personal choice. You guys raise a bunch of very good points on why it doesn’t make macro sense for the industry. Well-written.