AT&T, Verizon, others reportedly considering move to shift games into MVPD cloud space

MVPDs are ready to turn the tables on video-enabled gaming consoles such as the Microsoft (Nasdaq: MSFT) Xbox, Sony (NYSE: SNE) PS3 and even the upcoming Nintendo Wii U and deliver their own cloud-based games on their own networks.

According to a story in Bloomberg BusinessWeek, MVPDs will begin gaming services trials later this year, and wider deployments could stretch through 2013 and 2014. AT&T (NYSE: T) U-verse, Verizon (NYSE: VZ) FiOS, Comcast (Nasdaq: CMCSA), Cox Communications and Time Warner Cable (NYSE: TWC) are among those listed in the story as participants in a move that could shift games away from consoles and into the MVPD cloud.

The MVPDs would reportedly use technology from such companies as Playcast Media Systems, CiiNOW and Agawi, all of which confirmed they have been in talks with MVPDs but declined to name names. Time Warner Cable and Comcast declined to comment.

AT&T was more forthcoming, with spokeswoman Jan Rasmussen admitting that the company is "exploring unique ways to offer cloud gaming services to our TV and broadband customers." Verizon's spokeswoman, Deidre Hart, didn't offer up much more than to say what is already known: Verizon doesn't "offer anything regarding HD cloud gaming."

MVPDs would have to license virtualization technology, incorporate "powerful graphics processors" into their data centers and attract an audience willing to pay for the experience. That's not necessarily a slam dunk. The story cited the case of the OnLine Live start-up backed by AT&T and Time Warner that failed to get an audience for its $9.99 a month service and also mentioned Gaikai, another competitor that agreed to be bought by Sony.

Still, there are plenty of reasons why MVPDs would want to play in the lucrative games business. The potential to make a lot of money is huge and the potential to grab and hold a generation of gamers who are drifting away to OTT is even bigger.

"It makes perfect sense why they would want to go after this market," Mitch Lasky, a partner at Benchmark Capital and an early investor in Gaikai, told the publication. "Streaming games use a ton of bandwidth and really benefit from good networks. But it's a gnarly execution problem they're trying to solve."

It's also an expensive proposition, suggested Nvidia's Senior Vice President Tony Tamasi, who said his company is working on it.

"It's a substantial investment of both hardware and software," Tamasi said. "We've put stuff into our chips specifically to enable this kind of functionality."

Games publishers have to like the idea as well. If the MVPDs can get together and come up with a common platform, a game would only have to be written once rather than multiple times for multiple gaming platforms.

This is not only a U.S. phenomenon. Cloud gaming is already happening in Portugal, France, Singapore and South Korea, with Playcast and CiiNOW providing help.

"If there was ever a service that fit network providers, it's this one," CiiNOW CEO Ron Haberman told BusinessWeek. "2013 is going to be when we see big commercial offerings."

For more:
- see this story in Bloomberg BusinessWeek

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