GaiKai being acquired by Sony reminded me I needed to write up this post.
Don't expect to be playing lots of cheap games on GaiKai after the Sony acquisition. The economics of video streaming of games are tough.
Whilst you can buy cheap time of a virtual PC on a network from a myriad of cloud companies- at Google I/O their Compute Engine was announced to offer a basic virtualised CPU at 14.5c per hour.
But, this cost needs to be qualified when thinking about a game streaming service.
Firstly, a virtualised CPU is shared between lots of customers processes. Whilst you get an average performance you paid for, peak performance varies greatly. That makes for occasional stuttering that doesn't matter in a business application, but would be bad in a FPS game.
Next up is the impact of GPU performance. These services render the 3d on the server. That means that you need a GPU in the server to do so, and most commodity servers just don't have GPU's with any umph. Fortunately, Nvidia's announcement of a virtualisable GPU for servers will help, but as yet the costs and loadings aren't visible.
It's worth remembering too that a cloud hosted game demands more of the CPU/GPU than the same game does when running on a home PC- as it must compress the video from the game with very low latency so it's small enough to send to the consumer.
So having their own servers (or deals to put GPU's into 3rd party racks) isn't too bad?
Well it would be, but there's a compounding issue: the speed of light. Unlike ordinary cloud services, games need fast response times, too fast for servers to be located far from their users. That means that whoever owns GaiKai needs to equip enough servers close to their customers to cover PEAK loads.
So, round Christmas, where perhaps 50% of PS3's might be operating in peak hours, there'd need to be the capacity to service them from servers with GPU's close to the customer.
It's very hard to get to a final answer- as lots depends on the deals you can do and the scale you can reach, but in my opinion it'll be well above $1/hr to provision the service at 720p, and maybe twice that again if you want to go to 1080p.
That has implications- if the average AAA title has 20 hrs of gameplay then that's a big dent in the game economics, unless you believe that the consumer will be happy to pay an extra $20/game to save on buying a new console?