Inside Gaikai: how to make cloud gaming as easy as watching YouTube

That might not immediately sound like a game-changing announcement, but Gaikai executives are over the moon. Samsung is arguably the world's largest tech company - "There isn't a bigger deal to do in cloud gaming," says Perry — and it's not Gaikai's first rodeo. Samsung rival LG already committed to updating every one of its 2012 Cinema 3D television sets to include Gaikai back at CES, and the company believes it's going to be a strong differentiator for TVs. Back in Gaikai's spacious glass conference room, Perry has me imagine two TVs on a wall: "The TV on the right plays every video game ever made, the one on the left doesn't. The cost difference is nothing. That's why we think it's going to be compelling."

If that sounds akin to the Netflix strategy of putting a popular streaming service on every viable platform to shake out the most users, it's no accident. "We're incredibly jealous that movies and music are everywhere, on every device, and we would really like everywhere you see a Netflix icon, for there to be the best games available as well," Perry says. The difference is that Gaikai isn't trying to build a paywall for protected content: the company wants its games to be as ubiquitous as YouTube. Today, if you go to Best Buy or Walmart in your web browser and check out a supported game, you can play a timed demo right there embedded in your browser window, even blow it up to full screen, without ever leaving the store's page. In the near future, though, Gaikai plans to make that YouTube analogy complete. It's planning to offer full embed codes so you can put a Gaikai window in any old blog or website, and shortlinks that you can tweet. With embedded buttons and scannable QR codes, Perry suggests, every single marketing material for a game (whether poster or email blast) could direct you to an instantly playable demo.

And then there's Facebook to consider. Gaikai is already embedding game demos in Facebook pages, and publishers have taken notice: Perry says there are AAA games that coming specifically to Facebook in the near future. "Imagine you're clicking through a whole bunch of Facebook games and then you hit Mass Effect 3 - what are you going to think? Nowhere does it say to you that you're going to run a game from the cloud. We had that language in there, and we took it out," the CEO explains.

See more pics of Gaikai's HQ in our full gallery!

It's demo time, so we leave the conference room and head back through the lobby, past a fully tricked-out custom MAME arcade cabinet (with chrome-plated sticks, a dial, a joystick, a trackball, pinball flipper buttons, and even a light gun, not to mention nearly 3,000 games) and walk to the very first cubicle, where we meet Mike Lee. He's a soft-spoken QA tester with a reputation for excellence and the patience to be filmed, but he's showing off things I've already seen: Gaikai running in Facebook, Gaikai running on a webpage, Gaikai in a custom YouTube channel. What I haven't seen before, though, is three games streaming to a single computer simultaneously.

While I can't really think of a practical reason to stream three games at once — "Sometimes there'll be a little cutscene or something, and I won't want to watch the cutscene," Lee answers bashfully when I ask — it certainly seems to work. When I take the controls, I find that my Crysis 2 pistol fires as rapidly as I press the mouse button. Lee tells me that these demos are streaming from servers in Los Angeles, a reasonable distance away. Next, we have a look at a hefty Asus laptop with a 120Hz 3D screen, streaming Darksiders in stereoscopic 3D. Gaikai says it takes a bit more bandwidth for 3D content since it's processing twice the frames, about 8-10 megabits compared to the 5-6 megabits the company typically recommends for streaming.

While the Asus gaming machine might be able to run Darksiders all on its own, it's hard to say that about the next device I see: Brendan Iribe, the company's chief product officer, introduces me to a rough prototype of the Wikipad, a single-core Android tablet with a fairly comprehensive set of detachable game controls and a glasses-free 3D screen. Unfortunately, the prototype doesn't actually work, but Gaikai's Android app most certainly does: after the company sets up an Asus Transformer Prime, I get my very first taste of Hawken (it's a fast-paced missile-dodging mech battling blast) and even manage to pull off an ultra combo in Street Fighter IV: Arcade Edition using a Logitech F710 wireless gamepad. Both run exceptionally smoothly on Asus' tablet and look great on the relatively small IPS LCD screen.

There's an Ethernet adapter plugged into the tablet, to be sure, which might improve latency, but Gaikai's confident that games will run without. In fact, the company claims that the Wikipad will be able to stream Hawken in 3D, playably, over a wireless connection. "We don't want to just throw something out there that you try, that you like, that is kind of a cool idea, but isn't playable." says Iribe. "Whenever we launch the service on anything - whether it's a TV, a tablet, a phone - we want you to pick it up and go wow, this is awesome, I want it. And that's why we got really excited about the Wikipad." CEO David Perry says demand for the Wikipad looks pretty strong: "All the retailers are ordering it like crazy to make sure they get some in time for Christmas."

If would-be customers don't have a Wikipad or a USB controller, though, how will they control their games? One of the major challenges for cloud gaming services like Gaikai is figuring out how to deal with the growing popularity of devices that only have touchscreens. Here, though, Gaikai has aces in the hole: Brendon Iribe just so happened to be the president, CEO, and co-founder of Scaleform before its acquisition by Autodesk last year. If you're not familiar, Scaleform created an extremely popular middleware solution for building scalable video game user interfaces, used in blockbuster titles like Batman: Arkham City and Mass Effect 3. In fact, Iribe's also brought over his partner Michael Antonov, who was Scaleform's chief technology officer, and Gaikai just signed a deal to license Scaleform's tech last week. Surprise, surprise: the tablet and TV interfaces I've seen today were built on Scaleform, and the company's also prepping touchscreen controls for its Android app using the tool. Gaikai engineer David Coles lets me take the rudimentary touchscreen UI for a spin, and while it's not particularly impressive at this early stage - just a virtual D-pad and some buttons - the vision is rather neat: You'll use your tablet as a touchscreen controller for your Gaikai-equipped television, then press a "Takeover" button and transfer the whole session to your tablet screen so you can take your game with you.

If you've been paying attention to the cloud gaming space, you know that Gaikai is not alone. At the 2009 Game Developer's Conference, roughly seven months after Perry gave an inspirational talk about the future of gaming that prominently featured server-based tech, a company named OnLive beat Gaikai to the punch. As far as Perry is concerned, though, OnLive isn't a competitor at all. "We announced at the same GDC and literally from that moment we each went off in opposite directions," he says. If you've been paying close attention to the cloud gaming space, though, you might think his words ring somewhat false.

In many ways, the most intriguing element of Gaikai has been the business model. While OnLive acts as an online retailer and subscription service provider, trying to sell you games, Gaikai is actually an advertising network masquerading as a game service. Gaikai's timed demos are merely extremely interactive advertisements designed to tempt you to buy a game. Like most advertisers, Gaikai is paid per impression, or click, or registration, rather than purchases of the game itself, and the company doesn't keep any of the revenue. Perry compares Gaikai to a cellular carrier:

"We look at ourselves like Verizon; you buy minutes on the Verizon network... but if you make a phone call and do a business deal on a Verizon network, they don't participate in that deal; it's none of their business what the deal is and who's talking to who, and how much money is changing hands: that's literally none of their business. And that's the way we think. Our job is to deliver the dialtone, and whatever business is done between the publisher and the gamer is up to them."

Eighteen months ago, I got an exclusive sneak peek at Gaikai's service, and to honest, it wasn't something you'd want to continually play... but I'll never forget what Gaikai's co-founder asked me that day. He asked if I'd experienced enough of the game to figure out whether Mass Effect 2 was worth buying, and I had to admit the answer was yes: the service provided me with a "good enough" demo of what the title was like, with a minimum of effort, to seriously consider adding it to my collection. A year and a half later, though, quite a lot has changed. Both OnLive and Gaikai are quite playable on a decent broadband connection, assuming there's a nearby server. Both OnLive and Gaikai are building partnerships in the TV and tablet spaces, models that don't have gobs of local storage or processing power and thus need a streaming-only service. How does Gaikai's try-before-you-buy advertising model apply when the company is continuously streaming games to customers, rather than selling titles that they'll play on their own console or PC?

However, to use a favorite expression of Perry's, there's a twist: If you've got a Samsung Smart TV, you won't be playing on Gaikai proper; You'll be playing on Samsung's Cloud Gaming service, powered by Gaikai's network. While Gaikai facilitates the transaction, negotiates rights to particular games, integrates them into the service, builds the UI, and even puts the physical server racks together, it's Samsung that's footing the bill and Samsung that reaps the rewards. Samsung will get a cut of the purchase price, just like a brick and mortar retailer would. The secret, the company tells me, is that each new partner pays for their own set of dedicated servers in Gaikai's cloud, such that every time there's a new company, the whole network expands that much more and thus lowers the latency to end users. Each partner that isn't using their full capacity at a given moment leaves that much additional bandwidth for others to stream their games, and as a result, Gaikai claims its service is now live in 88 countries. In short, while Gaikai is almost definitely competing with OnLive at some level due to the expanded focus, it seems like the company is still true to its roots: it's a business-to-business firm, and thus it's not a centralized Gaikai that's expanding, so much as a slew of prospective grey-label providers using Gaikai's network.

All that said, Gaikai isn't pushing straight-up cloud gaming at the expense of the home PC: in fact, perhaps the most impressive demo we saw at the company's headquarters was all about downloading games. Perry jokingly calls it "Non-Linear Asynchronous Progressive Crowd-Sourced Proximity-Accelerated File Delivery" (or "NLAPCSPAFD" for short), but you'll probably know it as the Gaikai Downloader... if you ever encounter it at all. The idea is that Gaikai can use its low-latency global network to deliver files very rapidly and its web interface to trigger an install, and combined with some secret sauce, you can press a single button in a browser window to install a game on your home PC and start playing it while it installs. The process takes just a few minutes to get the first chunk of the game ready to play, then streams the rest while you do. If that sounds like a familiar idea, you might be thinking of the defunct company InstantAction, which was actually slated to partner with Gaikai on just such a service before it shut down. Perry admits the connection, but says that Gaikai ended up rebuilding the idea in order to allow for non-linear games and take advantage of peer-to-peer paradigms to speed up downloads. "We had to start from scratch," says the CEO. The next step, the company says, is to merge streaming and downloading together into a seamless whole: eventually, the company hopes to unify the two ideas such that you could start streaming a game, download it seamlessly in the background and slowly wean your computer off the cloud, such that by the time you're done playing it's fully installed - just as if it had been there all along.

When David Perry gave his "Future of Games" keynote at the Leipzig Games Convention Development Conference in 2008, Rui Pereira was paying attention. Two months earlier, he had quit his job as a web architect at UPC Broadband in order to dedicate his time to game streaming, joining his UPC coworker Andrew Gault. When Pereira heard David Perry speak about the idea of cloud gaming, he told Perry that they'd already achieved his dream. Perry couldn't believe his ears. "I was like, no, no, no, I don't think so, but then he sent me a link and I was playing World of Warcraft," Perry recalls. "Yeah, we had a 200ms latency back then," adds Pereira, thinking back to a time when the service was barely playable. In 2009, the three of them formed Gaikai.

If you ask the co-founders to talk about their initial reasons for pursing cloud gaming, they'll say different things, but the answers are much the same. "The real motivation, business models aside, was this idea that you could standardize access," says Pereira, discussing how media formats and hardware limitations have limited the audience for games over time. "If you look at PlayStation vs. Xbox vs. anything else, each game has to be created for that specific platform." Perry, who (by group recollection) was thinking of the business from the start, primarily talks about the idea of "reducing friction" as key to letting people enjoy games. World of Warcraft weighs in at 30 clicks to get started, gigabytes of content, patches and expansions to download, and four legal agreements to read. He points to the installer. "See that greyed-out play button? Gamers love that," he tells me sarcastically. He points to Apple's iTunes App Store as a force for change, how the single account and attached credit card did wonders to allow people to quickly and easily start playing games. Between two-click streaming demos, downloaders and full streaming titles, you can probably see how Gaikai is trying to follow suit. Even the few clicks it takes to install and update Java, required for Gaikai in the browser, is on Perry's hit list. "We actually convinced Sun to remove them, but then Oracle bought the company. We are also trying to get this capability added to the HTML5 standard," he told me.

Brendan Iribe, however, is primarily interested in reducing friction of a different sort. As chief product officer, with his background in Scaleform's UI, I figured he was in charge of the company's tablet and TV initiatives, but he tells me that's just one piece of the puzzle. He's here to help build an SDK that not only lets TV, tablet and set-top box manufacturers integrate with Gaikai's network, but game developers too. "They want to start targeting the cloud as a new platform," Iribe tells me. We dove off into other topics for a bit, but David Perry brings it up again: "Think about all the new things you can do in a game when you have unlimited storage. Like if the game is 100GB, that's fine by us. If the game needs multiple GPUs, that's possible too."

When I ask if there were any games in development doing things that can only be built for the cloud, though, they're reticent to answer. The executives suggest that we'd, say, be able to run games that would normally require three graphics cards much sooner than it would normally be affordable, or scale up the graphics of existing games to have incredible draw distances, or avoid programming cheats like stealing resources from one part of the screen to draw assets somewhere else. Finally, Perry admits that a game truly built specifically for the cloud isn't in development yet, but suggests that it's only a matter of time. "All you need is one visionary game designer to take the lead and make something," he says. "What we're trying to do is show the world that cloud gaming is something to take seriously, it's not going to go away. Do I believe that someone, somewhere, will make a game for the cloud? I do."

"We're patient," adds Iribe. "We never give up on convincing people that this is something they need to be targeting, something they need to be adopting, and we're doing the same thing with developers. We're going to be knocking on developer's doors, and pitching to developers, and going to developer conferences - not just big tech shows, actual developer conferences - and showing them and inspiring them to target the cloud."

"As developers ask us for more and more features to add to the cloud, some day this turns into the cloud operating system. That's the endgame," says Perry.

His next words are cryptic, but unlike most anything he's told me thus far, they smack of something new: "The SDK will be just like iOS. iOS has a lot of things that developers can use to put together any application. If you can imagine iOS as the cloud, meaning that it's written specifically to distribute across all devices, and your product is ready to do that, the "Gaikai OS," effectively, will deliver all of the information to all of the devices, just like an operating system is supposed to." It's as if he's putting this idea into words for the first time.

I ask: "So is there something, then, in the works, that's beyond Windows in terms of what you're going to run these games from, before you stream them to people?"

The answer comes from Iribe and Pereira at once. "Can't say right now." "That's confidential."

I laugh.

"We've got some really cool stuff in the pipe," says Perry.

Thomas Houston, Joshua Cherkes, Tyler Gold, and Kelsey Scherer contributed to this report.