A Storm Is Brewing: Chris Donahue on How OnLive Will Be King of The Cloud
Posted on Monday, August 1 @ 16:30:07 Eastern by Sebastian_MossWe live in a digital age where the world's news is right at our fingertips, where we can listen to music or watch a movie without having to buy a DVD or download an entire track. However, for most gamers, they still have to go to the store to purchase a retail copy or download a game that's several gigabytes. One of the biggest proponents of cloud gaming, OnLive, has already proved that if you have a strong Internet connection, you can play games online, instantly, without the need for an expensive gaming PC.
But OnLive still has a long way to go if they hope to become the Netflix of the game world, with far harder hurdles to conquer and far more challenges to overcome. To talk about the many, many challenges, their plans for non-gaming services, the future of consoles, and much, much more, we traveled to Brighton to chat to Chris Donahue, Director of Publisher Relations for OnLive at the Develop Conference.
Hi, Chris, could you start by introducing yourself and telling us about your work at OnLive?
Hi, I'm Chris Donahue, Director of Publisher Relations for OnLive.
What are your roll-out plans across Europe?
We are launching this autumn in the UK and shortly thereafter will expand into other countries in Europe. We haven't announced anything yet, but our intent is to provide complete coverage, just as we have in the US.
Will you launch with your full lineup?
Some of it depends, publishers have some rights to some games that may not be over here, and there are countries like Germany where some games are banned, but our intent is to offer all of our products to as many places as we can - it's good for our business, it's good for publishers and developers as well.
Are you hoping to match retailers' release dates straight away?
Our intent is to ship all AAA games day and date with retailers. We've just come out of shipping Red Faction and Duke Nukem Forever and then F.E.A.R. 3, 3 weeks in a row. I don't want to do that again, they need to be spaced out a little bit, but yeah, our intent is to ship day and date with retailers.
Every time a big game like Call of Duty comes out, the title's multiplayer goes down - even though the publisher has a good understanding of how well they will sell. How do you cope with unusual peaks in traffic usage?
Our backend is built for scale, and so we've yet to run into a problem where we are unable to host people. So it's more a matter of that we have a really good IT group and systems integration group that is really good at managing the loads we have. In the US we have 3 locations and we balance load across the 3 locations, my assumption is that we will do the same here in Europe - we have data centers here in the UK and Luxemburg, so for redundancy and also for reaching further into Europe.
So how much percent backup servers do you have above the norm?
To be honest, I don't know, I can ask to see if I can get an answer for you. The main point is that we have enough for our projected growth curves and if we reach a growth curve where we don't have enough that's a really good problem to have [laughs]. And it's all just more hardware, we can build more hardware.
Does indie have a place in OnLive?
Indie has a big place in OnLive, we have a ton of indie content on there now. I couldn't tell you a specific number, but we try and support the indies, like at the Independent Games festival at GDC. You'll see us supporting that again next year, and with IndieCade - y'know, it's were fresh exciting stuff comes from. I love the big stuff, but I think you find really unique, interesting sort of genre-changing stuff, with indies. We love indies.
And at the panel you were at yesterday, you talked about the eventual end of consoles - do you think the Wii U's rather unique and weird controller was made because you couldn't copy that?
We could actually. We showed at E3 that you can play OnLive on your Mac or your PC, you can play OnLive on your television using our micro console (and later this year we'll be integrated into Vizio's TVs in the US), and there's also currently an app available on the iPad called 'the viewer', but later this year we'll release the ability to play with a universal controller on the iPad. So, I think we're positioned to be able to provide... ultimately, I think the point that I was trying to make yesterday was that we have ubiquitous access to content and it's like 'your game is everywhere'. We are not limited to one device.
It's like we said yesterday, I think they'll be around for a while, it's a known and established business and they won't go away quickly. But at the end of the day, there's no reason we couldn't run on any console - we will be on Vizio Blu-ray players as well. So any device that can do video decode we can run on it, so I think we're well positioned to allow people to get to our product, and our publishers' and developers' products.
How will you compete with more complete packages that will have movies, music, etc., as well as games?
To be honest with you, we stream video down to the end user, we did the hard bit of making games work, movies are really easy for us to do. We haven't announced it, but it's been demoed and we can stream the full Blu-ray experience. Steve Perlman, who is our CEO, showed it a month ago at an event in New York, they also showed Enterprise applications. Unfortunately, I don't have it here, but if I had a good connection I could show you Maya 2011 running on iPad.
So do you think you are going to expand into other services then?
We haven't announced it but it's extremely easy for us to do pretty much that. It's dependent on demand, on the market place. Netflix are raising their prices, there's been a bit of furor about that, it's a commodity market at this point, and the reason we got in the game is that it's a good business, it's something we know we can make money out of, it'a a sustainable business. One of our partners is Warner Bros. Interactive, so my guess they saw more than just games in us. I am not announcing anything, but since we are sending video down anyway, so doing a movie isn't much of a stretch.
But do you think that Netflix could do the same and come over into games?
I think it would be more of a challenge for them to do that, there's a lot more to it than just watching a video stream, there's the redundancies, the backend, controller input, the compression at both ends. It's a complex business, we've been building it for about 7 years, so I'm sure someone else could come along and do it, but it's a significant investment, and I'd be surprised if Netflix did it, they're trying to stick to their core business.
So how important do you think being first is?
That's always a good question for anybody being first, right? It's the old analogy about being the pioneer: you get there first but you also get the arrows. With technology and the way it moves I think it is very important. For example, if you ask Microsoft why they released the Xbox  when they did, it was important for them to be out significantly in front of Nintendo and Sony. From that perspective I think we felt the same way, we probably could have waited a little longer. We launched a year ago at E3, June 2010, we could have released a little later with a few more features and a bit more polished, but we thought it was important to get it out. So, it has been a year and a few months, the community loves us, people are extremely passionate about it. In some of the polling we have done with our users they're extremely likely to recommend us to a friend, which to me says a lot about how happy they are with the product.
Is word of mouth your main marketing technique then?
We're doing some other marketing too, we're trying to do a lot of different things. Right now, we're all about customer acquisition, so there's a lot of advertising and we've tried some television commercials, we'll try some more. We are partnering with the publishers too, but at the end of the day it's all about the customers. So if I tell you "hey, come to OnLive and play some games, there's a really cool interface and stuff", it's not gonna be that compelling, but if I tell you "hey, we're going to have Dues Ex: Human Revolution on the day that it launches and you can actually play it instantly, at midnight and you don't have to go to the store you can instantly launch the game and play", it's kind of a compelling value proposition.
Another possible competitor in a strong position is Steam. Do you think that's likely?
It's possible; we're not really competitors right now. I've known the Valve guys since they started the company, I love what they do, I think Gabe is one of the smartest guys in the industry. But again, anyone can start in any business - we could get into digital downloads. Right now, we are comfortable in our core competency. I couldn't tell you whether they're doing anything or not, but in the conversations that we've had with them we both kind of like what each other does.
I was talking to a developer about your iPad app, and he said for it to be truly successful it should have a games build for the touch interface. What do you think about that?
The thing is, those types of games don't necessarily scale back to the television, Mac or the PC. But, there's a game that we demoed called From Dust by Ubisoft that has native Windows 7 touch, the interesting thing about that is that it works on OnLive, because our backend is Windows 7 servers. So if the game has a touch interface on OnLive, there's nothing else we have to do, but we do like that games have controller support as well. I think, there are some games that make sense for touch, some that don't - I don't think I'd ever play a first person shooter with touch, that might be a little bit of a challenge. But that's another one of those things we announced back at E3, the universal controller that'll work on your iPad or Android tablet, and you can have a quality AAA gaming experience while you're sitting at the airport - most airports have pretty good WiFi connections. You can whip out your controller and just play.
So if Windows 7 or Windows 8 Touch really kicks off, that’ll help you then?
Yep, if developers are going to use the Windows touch interface it will likely just work on OnLive.
What has Apple's response been to the app? Do they take a commission?
You'd have to talk to Apple about that, like right now you can watch brag clips, but we'll probably launch the Android one first. On the Apple side... I don't think we reveal our business model or internal dealings, but Apple does like to get their cut, as we've seen with other things. I'm not involved with those discussions, but they recognize what we do elevates the quality of their product.
So you are not worried they see you as a competitor?
There is no indication of that yet.
At the moment you can play OnLive through wired or WiFi connections, at what 'G' level do you think we'll be able to use OnLive?
That's yet to be determined, 3G and 4G are a little less constantly connected as we'd like. Video and even voice communications suffer from data drop outs and lost packets, which is a problem for real time gaming. We're experimenting with it, but we haven't announced anything. I'd like to be able to whip out my phone and play OnLive over 3G. As you probably know and as most people probably know you can sit there and look at the signal and see it go from 5 to 0 and 5 to 0 in seconds. So, we are working on that but it will be a little further out, WiFi and wireless are the best way to go right now.
Do you think that BT and other ISPs cancelling many of their upgrades to Internet speeds and quality will hamper your growth?
BT is one of our partners, and they're extremely aggressive about the launch later this year. One of the things that people in the UK maybe aren't aware of is that the infrastructure in the US is nowhere near as good as it is here actually. I could show you a heat map of where people log in and it's the West Coast and the East Coast all the way up and down the Eastern Seaboard - Chicago, Texas - big population areas, but there are big areas in between where 2 MB is sort of standard broadband because there's no infrastructure. There's people who can't see another house, so for a company to run fiber to them is not very cost effective, right? So, it's one of the things actually in Obama's State of the Union address in January that specifically focused on upgrading the infrastructure in the US, because we're lagging behind other countries. Places like South Korea and Scandinavian countries seem to be a little bit more progressive that way. We are not concerned about it, I think there is a enough business in the current infrastructure, and as companies like BT and Virgin upgrade it, it will give us a good, controlled growth. I think if everybody decided to connect at the same time we might be a bit overcrowded.
What are your thoughts on bandwidth caps and charges?
They are a reality, there are costs that these guys have and they’re trying to make money on it. I think, no matter what you are doing, if you’re downloading significant amounts of data you will run into a bandwidth cap. I’ve never met someone personally, but I’ve read stories on the internet. I tried on my system at home, I was basically uploading and downloading things between my office and home. And I spent a lot of time on Netflix, and I obviously play OnLive a lot, and I didn’t get it. My personal opinion? I’m in favor of companies making money, but I’m not in favor of companies making too much money or taking too much from consumers. There’s a larger discussion about infrastructure and bandwidth in connection to internet at home, and whether it is a right, but that’s above my paygrade.
The PSN recently went down for over a month. How do you try and ensure that doesn’t happen to you?
Our network is a little different to the PSN, our backend and the way we do things is a little different. The OnLive client isn’t as open a product in allowing people to do things. I mean, I feel bad for Sony, it was an all out attack and I think the UK and US governments are looking into it to find out who did it. It’s cyber crime, it’s fundamentally cyber terrorism, and I’m certainly against it in the strongest sense. Is OnLive susceptible to it? I think that anyone that has something online is probably susceptible to hackers at some point. We try to be as strong and secure as we can be.
If you did have a couple of weeks of downtime, do you think you could cope?
A couple of weeks down time? It would be difficult for us, mainly because you have to be connected to play the games, and I believe we’ve architectured our backend so that would never happen. That said, barring an EMP, or some catastrophic failure or something, there’s always that chance, but we’ve mitigated that as much as possible.
On consoles we have motion controls that have a lot of latency so that it just about works on the console. So, if you add your latency, where does that leave you?
We’re investigating the motion control stuff too. Again, that’s one of the things that we’ve put a lot of effort and time into, eliminating as much latency as possible on our system. It’s one of the reasons we built our own controller, because the standard controller you get at the store have about a 50 – 80ms latency, ours has less than 10, which keeps the overall loop to 80ms or less. I was doing a demo to a developer here in the UK and someone was doing trace routes on the packets and he tracked them all the way back to the West Coast of the US and back, and we were still having a great experience. But motion controllers… I don’t want to negate their desirability too much, but it’s not dissimilar from the Wii, when people first started playing Wii Tennis you were up in the room and you were swinging wildly, and then you just realized you could sit back on the couch flicking the controller. I think Kinect has some great potential, I actually worked with the company that Microsoft acquired on that before I left Microsoft, and I think, it’s really cool.
When people come up with a killer application – that maybe the interface or a game – there’s no reason we couldn’t support them, the latency could be an issue but, I think, Microsoft and Sony and the smart guys that work there are trying to eliminate that as much as possible, because that’s a problem when you play it on your 360 too.
Do you ever pursue having exclusive titles?
We haven’t yet, but that’s certainly something that we’re talking to publishers and developers about. I know that there is some level of exclusivity that does help, and that’s the reason you can’t play Halo on every platform, that said, we’re a start up, we don’t have the capital and investment that Microsoft and Sony do. We also don’t have a first party like they do, and we have no intention of ever becoming a game developer or publisher.
There’s two different ways you can play OnLive: One where you buy the game and get access to it just like with any other download service, and then there’s also Playback where you pay 10 dollars a month in the US and you get access to 65 different games and there’s a lot of great titles in there. We have Homefront on the regular service, and then there is Homefront large scale multiplayer warfare, which is basically the same game but just the multiplayer version – and we’re the only ones that have that, it’s not really an exclusive, it’s kind of an exclusive experiment. THQ are looking into different revenue models and different ways to monetize things, and this is one of the ideas we came up with, and it’s actually doing really well.
I think at some point in time you’ll likely see exclusives on OnLive but right now, that’s not what we’re about.
Say you were the dominant games platform. What onus is there on you to upgrade your hardware?
I think there is every onus on us if we expect to get the next latest, greatest content. Because every year people building better and faster, bigger hardware and they’re also building bigger software to take advantage of that hardware. Also, as CPU and GPU capabilities increase, it allows us to run more virtualized sessions so it actually lets us reduce our hardware running costs.
Do you think in the future your hardware purchasing decisions could have an impact on certain computer chips' success?
It’s hard to say, I don’t put us in that big a position, I can’t think more than five years out.
Would you say that you are a core product or that you also appeal to casual gamers?
I think we are broad, we’ve got the two different models I mentioned earlier and those are basically two different audiences, and one of the guys that play the Playpack stuff seem to be more value conscious, and the data we’ve got back from the games they play are not necessarily the hardcore stuff. We’ve got a lot of the Indie stuff and the puzzle games and the adventure games and that type of stuff in there.
When we launched, the hardcore guys are the first attendees and the guys who try stuff out and wanna see if stuff works, but I think our audience has expanded, and once we start showing up in televisions, where someone can just click on it and launch it, I think we will broaden our audience even further.
Is the Vizio deal exclusive with them, or are you open to other TV manufacturers?
They are the only one we’ve announced so far, but there is no exclusive contract with Vizio, we can go with others. You may or may not see other announcements.
At what point do you see Sony and Microsoft getting into Cloud Gaming?
That’s a good question, I don’t know. Microsoft has Azure which is a cloud product already, but most of their stuff is headless, it doesn’t have GPUs which is important for gaming. It’s hard to determine, my guess? Who knows. They’ve certainly got the resources to do it, but I don’t know if they see it as something core to their business at the moment.
Are you prepared for them coming into the cloud gaming space?
As prepared as we can be.
Any money set aside for it then?
[Laughs] About $20, yes.
So what do you think is more important, price or product quality?
I think it’s both, there is a balance between those two, but I think a competitive product with the features that people want is one of the things that we can do. We can change our service, and upgrade our service on a daily basis if we wanted to – well, it does take a little bit of work, but we can change it on a regular basis, and add new features and functionality without there being a downside to you – you don’t have to download an update or anything else next time you log in.
And what’s your thought on 3D gaming?
The OnLive statement is that we can support it. It’s a video stream, right? We can handle it. My own personal thought? It’s probably a ways out, it’s just like 3D films, Avatar was great, and then what? Everything else is sort of gimmicky, it’ll be around for a while but again it’s like motion control stuff, if the content comes out that is a clear exploiter of it and people are like ‘I have to play this in 3D, 2D is just not as much of an experience’ then it will probably gain adoption.
And what is OnLive’s ratio commission, is it 70/30 like Apple?
[Laughs] That’s an interesting question, but we’re not talking about that.
What about with in-game purchases?
We don’t have any games that do in-game purchases yet, but we will soon. We do have games that have DLC, well, with us it’s just C as we don’t have downloads. Our system is pretty flexible to support that, we could do micro-transactions, we can do in-game purchasing. Like I said, we haven’t got a game up there that does that, but they’re in the works.
Obviously, you are smaller than Microsoft or Sony – but do you have a QA team?
Absolutely, that’s one of the things we built, we have a really strong, solid, big certification team, and every game that gets on the service goes through the Cert team and goes through the Cert process, so you don’t get your game on the service until you pass certification. A guy named Mike Yasko runs it for us, he was at EA prior, and he has great experience and a great team, and so far we’ve gotten great feedback from publishers.
And finally, do you think EA’s Origin is set to go cloud?
We haven’t had any conversations with EA, I don’t know what their plans are. There are a number of people who have attached themselves to cloud gaming recently, whether they are cloud gaming or not is a different story… it will be interesting to see what happens with Origin, EA has always been interested in maintaining their own customers, I wish them luck, but it’s not an easy business.
But do you think you could survive a publisher pulling all their games from your platform, like they did with Steam?
I think there is enough content out there, yeah. Certainly, we’d love EA’s content, but if they decided to go their own way, we would survive, yeah.
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