Will Net Neutrality Kill Cloud Gaming?

The title of this post is "Will Net Neutrality Kill Cloud Gaming?" -- and no, that's not the wrong way around.  While a handful of game developers just advised the FCC on the importance of net neutrality for the future of online gaming, and to an extent correctly so, there are cause-and-effects in play that also pose significant threats.


Let's get some definitions out of the way.  First off, for the purposes of this post, "cloud gaming" refers to games that are rendered in the cloud (i.e. on servers).  In essence, this is the promise of services like OnLive, a gaming offering that portends high-quality gaming on the simplest of devices by centralizing the heavy lifting in the cloud.  It's not there yet, but the intent has many gamers' hopes up for a day in the future when they can leave the hardware arms race behind.



"Net neutrality" is the idea of nondiscrimination for network traffic.  In essence, this means that high data streams like BitTorrent or online video can't be throttled by ISPs.  It also means ISPs can't charge companies for preferential treatment (like a gaming service like Xbox LIVE getting preferential bandwidth when the network gets congested).  Game developers are getting behind the initiative because they want to prevent ISPs from blackmailing them into paying for preferred streams, or throttling traffic, which will deliver sub-par experiences to customers. And while this scenario hasn't occurred so far, the whole point of ratifying network neutrality rules is to prevent it. But one crucial point is overlooked: network neutrality has nothing to do with billing.

See, the ISPs and telecoms are looking at network neutrality, and their dream of a B2B revenue stream is being crushed.  At the same time, cable subscriptions are being threatened by broadband video.  So these companies are looking at their current business model, and trying to figure out how to grow profits despite decreasing revenue streams.  The answer many are considering quite carefully is something called "consumption-based billing."  In essence, pay for what you use.  And this model is a death knell for cloud gaming.

The issue comes down to speed versus volume.  An absence of net neutrality threatens the promise of high speed, low-latency gaming.  Consumption-based billing either dramatically increases costs to consumers, or decreases margins to game service providers (depending on who is footing the bill).  A net-neutral world with consumption-based billing will mean cheerio for consoles and high-end PC games that have much of the content on disc.  But for services rendering frames centrally and piping that down to computers as an HD stream -- well that's going to be a pretty penny.

Both network neutrality and consumption-based billing are a far way off for terrestrial ISP networks, but they present a very interesting scenario to ponder.  But as digital distribution increases in share of sales, and as cloud gaming starts taking its baby steps, these issues are going to dramatically impact the future direction of a number of gaming services.  Let's watch and see how things play out.

[So, my personal opinion is: "pro" for both network neutrality rules and fairly priced consumption-based billing.]

3 comments about "Will Net Neutrality Kill Cloud Gaming?".
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  1. John Jainschigg from World2Worlds, Inc., January 25, 2010 at 11:12 a.m.

    Solid reasoning, here.

    It's also interesting to consider that a primary rationale for content-based billing is infrastructure optimization, and that the corollary requisite for net neutrality is (or has always conventionally been) overprovisioning, some degree of which is needed to insure QoS for diverse applications. Whichever way we jump (and I agree with you, net neutrality is the way to go), figuring out what 'fair pricing' is for usage-based billing will not be simple.

  2. John Grono from GAP Research, January 25, 2010 at 5:28 p.m.

    I agree with your conclusion Josh.

    I see it as analgous to the re-fuelling your car. The person with the 8-litre V8 gas-guzzler under the bonnet pays more per kilometre driven than the person with the 1.2-litre buzz-box (yes - I'm Australian and not American so I'm using my local vernacular). I see this as inherently fair as long as the cost per litre of fuel - i.e. the cost per Gb - is equivalent to all parties.

  3. Brett Glass from LARIAT, January 25, 2010 at 5:45 p.m.

    I'm an ISP, and I can tell you from direct experience that users do not want consumption-based billing. And they do want us to manage our network so that things "just work." "Network neutrality" regulation would prohibit ISPs from optimizing our networks so that games, VoIP, and other applications with special needs work well. And that would be very bad for gaming.

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