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Cloud gaming will not dampen console sales: ABI

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CIOL Bureau
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BANGALORE, INDIA: Cloud-based game services could suffer from latency problems, says ABI Research.

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Video games are of course perennial holiday favourites. But are consoles now for the birds? Nope, 2011 will NOT be the year Cloud Gaming dampens console sales

Are slowing sales of Nintendo’s Wii and growth in mobile gaming a sign of this transition?

With all the hype surrounding server-based gaming services such as OnLive, many in the media have been quick to anoint these services as the future of gaming (replacing consoles). Adding fuel to this fire Nintendo even suggested that Apple, not Sony, is its greatest competitor in the portable gaming market.

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While not out of the realm of possibility, this certainly won’t come to fruition in 2011 (or even within the next few years for that matter).

Game consoles and portable game players fulfill a particular set of needs and demand that are often (at least so far) inadequately satisfied by other services/devices.

Cloud-based game services could suffer from latency problems (particularly with regard to certain game types such as first person shooters). More servers are needed to address this, which will require time and resources to roll out.

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This is one reason why GaiKai has chosen to focus initially on demonstration games (prequalifying potential users for QoE before offering demos) rather than a full service. Perhaps most important, game libraries still pale in comparison to the preexisting PC and game console platforms. In addition, the smaller user base limits the multiplayer appeal.

Game consoles are also adding many of the features found in connected Netflix and other VOD platforms; word that Microsoft is considering a new video service beyond Xbox Live is a prime example. Video services such as Netflix (all current generation consoles), Hulu+ (PS3 and soon Xbox 360), and ESPN3 (Xbox 360) have found their way to these devices as well.

While OnLive is also reportedly interested in starting a video service (as are Amazon and other companies) the installed base of the game consoles far surpass OnLive, which should provide Microsoft, Sony, and Nintendo more negotiating weight (Sony owns a large amount of content as well.)

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