David Perry, Gaikai's CEO and co-founder, believes that the ability… (Mark Boster, Los Angeles…)
When Mike Bemiss was looking for a new video game to buy, he hopped on a site operated by Gaikai Inc. and clicked on "Dragon Age 2."
Within seconds, the 37-year-old engineer from Erie, Pa., was able to play the game right from his browser — with no download, no game console and no credit card. He liked it so much that he bought the game, along with the previous game in the series.
Headed by industry veteran David Perry, Aliso Viejo-based Gaikai operates a streaming service that is like Netflix for games. Users get a free look at the first 15 to 30 minutes of a game that interests them. If they decide to buy, they're sent to a retailer or the game's publisher.
"It's changed the way I shop for games," Bemiss said. "I can cut right to the chase and see if it's a game I'm going to like."
Cloud gaming has been talked about as the next big thing for more than three years. Several companies have already built streaming services, including OnLive Inc., Playcast Media Systems, Tenomichi/SSP's StreamMyGame and Media Speed Tech's GameStreamer.
Since then, streaming game technology has become increasingly available to consumers in the U.S. and Europe who have grown comfortable with the idea through streaming music and video. Game publishers are starting to see streaming games as a potential avenue for reaching new players while combating piracy. And even retailers such as Wal-Mart and Best Buy have embraced Gaikai's try-before-you-buy streaming service as a way to accelerate sales in their stores and on their websites.
"This is how people consume media these days," said Wanda Meloni, a media analyst with M2Research. "Consumers have gotten used to getting content instantly. What Gaikai is doing fits right into this new consumption pattern."
Not everyone believes that the market is ready for streaming games technology. Internet delivery sometimes involves a slight time lag. Players of shooter games require instantaneous reaction times. The loss of even a millisecond can ruin a player's chances in a shooter game like "Call of Duty" or "Halo," which are among the most popular games on the market.
"Nobody wants to be in the middle of a death match and have the game start to buffer just as they're about to make a kill," said Geoff Keighley, executive producer of MTV Network's GameTrailers TV.
Perry, Gaikai's chief executive and co-founder, is a 45-year-old Irish-born game developer known for titles such as "Earthworm Jim" and "Enter the Matrix." He believes that the ability to stream games will be a boost to the $50-billion global games industry. Free from the disc, games could flow to numerous devices that have Internet connections, Perry said.
Gaikai has agreements to stream full games to smart television sets such as the ones coming out later this year from Samsung and LG, as well as to tablet devices including the Wikipad, a gaming tablet that uses Google's Android operating system and is set to launch sometime before the holidays.
Under current agreements, Gaikai's game publishing clients — such as Electronic Arts Inc., Ubisoft Entertainment, THQ Inc., Capcom, Warner Bros. Interactive Entertainment and Take-Two Interactive Software Inc. — pay the company a service fee to stream their titles to hundreds of websites, including Facebook, YouTube, Wal-Mart.com, Best Buy and numerous game review sites.
The 4-year-old company is privately owned and does not disclose its financial performance. But its technology is promising enough that it has raised more than $50 million in funding from Benchmark Capital, Rustic Canyon Partners, New Enterprise Associates, Intel Capital, Qualcomm Inc. and others.
In addition, Gaikai has caught the eye of other investors who may be interested in plunking down even more money for a sizable piece of the company, according to people knowledgeable about Gaikai who declined to go on the record because the discussions are confidential. A company spokesman declined to comment on the matter.
Among its potential suitors are large cash-rich Asian companies. Firms such as Japan's Gree and DeNA, as well as China's Tencent Holdings, have spent billions buying U.S.-based online game companies in recent years.
Gaikai's name is based on a Japanese word for the open ocean, a term that suggests limitless possibility.
"Just like the open ocean, streaming allows games to be distributed a thousand different ways," Perry said. "Players are no longer tied to a console or a high-end computer when they want to play triple-A, high-quality games. They can now do so on any device, even cellphones with 3G or 4G connections."