The future of gaming lives inside metal cages, if you believe some of the biggest gaming companies out there. Piled on hardware racks, blinking with little green lights, it’s calculated inside stacked-together computers and pumped out of a remote server through big underground tubes. It is distributed across the globe—Shanghai, London, Prague, Virginia—from nondescript, city block-sized architectural monoliths. To see it up close, you would need to pass through multiple levels of security.
Over the past two years, it seems every major gaming and tech company has launched a cloud gaming service: Microsoft’s Project xCloud, Sony’s PlayStation Now, Google’s Stadia, Nvidia’s GeForce Now, Tencent’s Start. Facebook and Amazon are reportedly sniffing around too. For a monthly fee—$10 to $35—users can play a library of videogames on demand, streamed to their phone, television, console, computer, or tablet.
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Big Tech expects cloud gaming to be white-hot, if the major ante they’ve pushed into it says anything. Like a lot of cutting-edge tech, it cloaks the technology behind the magic, giving you the impression that you’re barely dealing with hardware at all. It’s a charming effect. Don’t fall for it. In interviews with WIRED, the people behind some of cloud gaming’s biggest services and data center organizations lifted the curtain on the infrastructure powering these immaterial services. Many agree that, as competition becomes more fierce, and cloud gaming sees mass adoption, success in cloud gaming could mean an infrastructure arms race.
“We live in a culture of ‘instant’ when it comes to any kind of electronic media,” says Microsoft corporate vice president of cloud gaming Kareem Choudhry. He was winding up for the cloud gaming pitch: Of the world’s 8 billion human beings, over 2 billion are gamers. Gaming is as culturally impactful as music, television, and movies. And until cloud gaming, there was no mass-market Netflix for videogames—on-demand content that’s device-agnostic. Besides, says Choudhry, “we know we’re not going to sell 2 billion consoles.”
Take something as simple as piloting Witcher 3’s Geralt a few steps to the left in a cloud gaming service. Flicking the controller’s analog stock initiates a ping-pong of invisible signals to an uber-powerful and remote computer: from the controller, through the internet, to the cloud gaming service’s nearest data center and then the cloud gaming server, which processes your action and calculates a new game state—which it then feeds back to your monitor, where Geralt has inched closer to the bar.
Cloud gaming is software as a service. That service is two-pronged: a library of videogames the cloud service provider has negotiated with game publishers, and a way to stream those games over the internet. This culture of “instant” has generated big demands for that delivery service: low-latency, so you can dodge a combo in Street Fighter V; and no packet loss, so your very alive-seeming Overwatch character isn’t suddenly dead. While a service’s performance depends in part on your home internet situation—and will change with the arrival of 5G, at least on your phone—much of its lasting success will hinge on data taking as short and uninterrupted a round trip as possible from your hardware to a data center.
“It’s everything besides bandwidth, second only to bandwidth,” says David Linthicum, Deloitte’s chief cloud strategy officer, of the importance of data centers to cloud gaming competitors. “The company that provides the fastest infrastructure and the largest points of presence in data centers around the world—that’s gonna go to who’s gonna be successful.”
If you’re playing God of War in Egypt, but your cloud gaming service’s closest data center is in Qatar, there might be enough delay between your inputs and Kratos’ movements to emotionally disconnect you from gameplay. In the US, sending an ax-slash signal from the East Coast to the West Coast takes 40 to 60 milliseconds; enough time for frustration to creep in. To give as many people as possible the best latency possible, you need to own or rent space from a lot of well-located data centers. “The slightest increase in latency, lag, or jitter can send early adopters away from these new platforms and back to their consoles and PCs,” says Jennifer Curry, the senior vice president of product and technology at data center colocation company INAP. “Just 20 to 30 additional milliseconds can be the difference between a top-tier service and an unviable service.”
Yet cloud-gaming-capable data centers can cost hundreds of millions of dollars to build. They need to be central to large populations—inside or nearby cities—require fiber-optic connectivity, and eat up immense amounts of power, including for cooling. They can be huge; Microsoft owns a Dublin data center that’s 550,000 square feet, nearly 10 football fields. On top of size and location, these facilities require top-of-the-line hardware, security, maintenance. And gaming servers are specialized with powerful graphics cards and other high-octane tech ensuring low latency, beyond what might be expected from a server that hosts Google Docs. It’s a gargantuan risk to invest all of that cash in infrastructure supporting a not-quite-mainstream-yet technology. At the dawn of cloud gaming, some tech companies are better set up than others to succeed in an industry so reliant on infrastructure.
“It is an expensive thing,” says Jim Poole, the vice president of business development at Equinix, the largest data center and colocation provider in the world. Consoles are simpler math: If Sony makes a million boxes, it will probably sell a million boxes. A hundred-million-dollar investment in data centers for cloud gaming, a million-dollar investment in high-end gaming servers—these may not pay off for years, or even ever. “The thing about cloud services that a lot of people don’t appreciate is that you’re investing a massive amount of capital ahead of demand.”
Smaller companies eyeing cloud gaming are dwarfed by the inherent capacity and scale of big tech players who already dominate on infrastructure. You can’t just pull a cord and inflate into a digital real estate tycoon. There’s no easy way to make up for decades of big-money investment in infrastructure.
That puts companies who own their massive, global network of data centers—including Microsoft, Facebook and Google—at a distinct advantage. It’s not just a matter of capacity; Microsoft’s Project xCloud developers work closely with the Azure data center teams to optimize the service and integrate it with their multiplayer, matchmaking and Xbox Live services, says Microsoft’s Choudhry. Two years ago, Choudhry promised Xbox head Phil Spencer not to build a brand new platform for xCloud. (“Any time you build a brand new platform, there’s so much friction that gets injected into the system,” he says). With 60 data centers across 140 countries, Microsoft was able to shift software from their existing Xbox platform into the cloud to deliver xCloud, something he thinks makes Microsoft more competitive than companies that don’t have their own data centers. (Last week, Microsoft announced it would be partnering with Facebook to bring xCloud to Facebook Gaming.)
“Any company that does not own and operate their own cloud has to pay margins to someone else to get access to cloud infrastructure,” Choudhry says. “They’re just going to be structurally disadvantaged against a company like Microsoft that has deep, deep investment, history, and assets across content, community and cloud.” It’s not so risky to pivot a pre-existing cloud infrastructure into a cloud gaming service. Plus, he adds, “Owning and operating our data centers means we’re able to optimize everything from top to bottom, which is beneficial not only for players, but also for us from a cost perspective.” In the long-term, data centers can be great investments for big tech, but it’s a huge up-front cost to erect one and get it online.
Google has an established cloud infrastructure, too, albeit smaller than Azure. When Google announced its Stadia service, it made the biggest splash among consumers, in part, because the company had a natural entry point into cloud gaming: 21 data centers around the world, and growing. Yet much of South America and Asia are unserviced by Stadia, and Google owns no data centers in Africa and Australia. Cloud gaming’s most persuasive pitch is to populations more reliant on mobile gaming—China, Japan, and South Korea—yet latency may impact users’ satisfaction. (At least, until 5G.) Concerns about uneven latency dominated early conversations about Stadia. So to keep latency down, Google released an official Stadia controller along with some sly tech for what it calls “negative latency.” Google says it will also use input prediction technology that creates a buffer to mitigate input lag.
(Google declined to be interviewed for this story.)
Owning your own cloud is a financial and structural advantage, but it’s not everything. Most cloud gaming companies, including those that own their own data centers, rent space, a practice called colocation. Sexier pitches paint the colocation business as “digital real estate.” Really, it’s leasing racks in data centers and installing top-of-the-line hardware that supports cloud gaming. Colocation providers have relationships with internet service providers and mobile service providers in what’s called a “peering exchange”—basically, network traffic hubs distributing data where it needs to go.
Nvidia, which owns 15 data centers across North America, Europe, and Asia, says it can reach 80 percent of broadband homes globally within 20 milliseconds, in part because it works with colocation providers that have locations in every city. “They have really large data centers in a few locations, but it’s not enough for cloud gaming,” says Phil Eisler, the General Manager of Nvidia’s GeForce Now, of the service’s competitors. Eisler has looked on as even the biggest cloud-owning companies rent space in colocation facilities proximate to their own.
Colocation is pricey, though, not just for space but for the computational goods. Although Nvidia doesn’t have its own cloud to whisk into a cloud gaming service, the company does have another resource: gaming hardware, and the infrastructure to make it. Nvidia sells cloud gaming servers combining a powerful Nvidia Quadro RTX 6000 and 8,000 GPUs with virtual GPU software, also made by Nvidia. “We have gaming-type servers in more locations than anyone,” he says, adding that “a YouTube server is not a Stadia server.” While other cloud gaming companies may have more data centers in total, they often have to buy Nvidia’s hardware to send the Witcher 3’s Geralt shooting through the sky to customers’ Android phones.
If a cloud gaming provider isn’t widely distributing the cloud-making stuff or the game-powering stuff, at least when it comes to physical infrastructure, the cards are stacked against them.
In May of 2019, PlayStation employees told Bloomberg they were shocked when Sony announced they were partnering with Microsoft to utilize its Azure data centers for PlayStation Now. For seven years—longer than its competitors—Sony had been developing its cloud gaming platform, having bought Gaikai and its cloud technology for $380 million. But after so many years toiling away, Sony’s cloud gaming initiative landed with the equivalent of a cartoon fart sound. PlayStation Now subscriptions hit 2.2 million subscribers in April, 2020, but according to several reviewers, it continues to have major problems with latency.
Sony has great games, and has benefitted from savvy exclusivity deals with publishers. Its PlayStation 4 console is considerably more popular than Microsoft’s Xbox One. But that advantage could fade if console gaming winds up in the graveyard of passé tech. Sony doesn’t have a cloud. Sony did develop its own proprietary server hardware in 2014, eight custom PlayStation 3 consoles in a single server rack. The consoles’ GPUs? Made in partnership with Nvidia. (Sony declined to be interviewed for this story, and the current status of its cloud gaming servers is unknown.)
A decade from now cloud gaming infrastructure may widely be considered a commodity. Unlike Microsoft, Google, and Nvidia, Sony hasn’t commodified its cloud gaming resources for mass consumption. “I think they probably should be concerned,” says Patrick Moorhead, the president of tech industry analyst firm Moor Insights & Strategy.
Gaikai cofounder and former PlayStation Now chief David Perry asked an important rhetorical question in an interview with the Verge: “If you are in charge of PlayStation, are you in the hardware business or are you in the gameplay business? I don’t think that was clear. Because if you’re in the hardware business, this isn’t very interesting. If you’re the guys building hardware, and someone starts talking about the cloud, it’s just like, ‘Meh, we’ve got work to do.’”
Nintendo, for its part, has chosen a different path. With mirthful first-party games and a console that sold over 55 million units, Nintendo hasn’t made any sort of commitment to the cloud gaming gamble. In a way, it makes sense; Nintendo’s great accomplishment is fusing hardware quirks like motion controls and removable controllers with quirky gameplay mechanics. There’s no world in which that translates to device-agnostic cloud gaming.
Nintendo is hedging its bets on cloud gaming’s uncertain future, focusing for now on what it does best. In an interview with Nikkei, a Japanese publication, Nintendo president Shuntaro Furukuawa acknowledged that this approach is what could protect them should cloud gaming become mass market:“It’s possible that cloud gaming could capture the public’s interest in 10 years from now,” he said, adding, “It’s a long way off before we’ll really know the outcome.”
Furukawa noted that while he doesn’t think dedicated gaming hardware will go away, not investing in cloud gaming may be its own risk, too. “It would be pointless to focus solely on methods of play that can only be had on dedicated hardware. Once your audience starts saying they can play on other consoles or smartphones instead, you’re finished,” he says.
Up close, clouds are nothing but a collection of physical matter. It’s hard to imagine them as anything but those component parts. Cloud gaming is the same way. It’s never guaranteed that an ahead-of-the-curge technology will catch on the way its creators pitch it. But for cloud gaming, a head start on building out infrastructure seems worth the gamble.
Updated 6-29-20, 1 pm ET: The number of Azure regions has been updated to 60 to reflect new regions added since WIRED’s interview with Microsoft.
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