Cloud-streaming game service Gaikai raises $5M

Cloud-based online gaming startup Gaikai has raised $5 million in funding, according to a Securities and Exchange Commission filing.

The company is headed by longtime game veteran David Perry, maker of games such as the Matrix and chief creative officer at video game publisher Acclaim. The company declined to comment on the filing, which does not identify investors. But one of the company’s directors is Mitch Lasky, a partner at Benchmark Capital.

Like its rivals OnLive and Otoy, Gaikai is planning to create a service that can deliver games on demand without the need to install or run software on a computer or game machine. Rather, it runs the game on servers in the cloud and shares constantly updated video images of the action with the gamer.

Seven-year-old OnLive has raised much more money and has partners like AT&T. Gaikai, though smaller, has a very focused strategy. “Our goals are really simple — to remove all the friction between hearing about a game and trying it out, to help reduce the cost of gaming, to grow video game audiences, to raise the revenue that publishers and developers can earn, and (most importantly) to make games accessible everywhere,” Perry said in an interview last year. “If the iPhone AppStore has taught us anything, [it's that] when you make it easy to check things out, you get a billion downloads.”

Perry didn’t reveal Gaikai’s business model. But the advantages of playing games stored on servers and not on home computers are myriad. First, gamers can buy the games on the spot and play them almost immediately. They can also play high-end games on relatively low-end hardware. Perry said gamers could use Gaikai to play high-speed racing games such as Need For Speed on low-performance netbooks (web computers that are smaller than laptops). Since retailers aren’t involved, the games could either cost less or publishers can keep more of the money. And gamers never have to download patches or other upgrades. They just need a decent broadband connection to be able to play. That opens even hardcore games to a broader audience.

Based in the Netherlands, Gaikai’s co-founders include Perry, Andrew Gault and Rui Pereira.

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