Cloud-based gaming companies could take years to earn money back, says exec

Cloud-based streaming game services like OnLive and Gaikai may not be ready for prime time, according to one game industry executive.

In an op-ed for the Business Insider web site, Dylan Collins who has founded game companies such as DemonWare (bought by Activision) and Jolt Online (bought by GameStop), said that in his opinion cloud-based gaming solutions still have a number of issues.

One of them is latency.

"Any latency is going to cause trouble, particularly for real-time games," he warned.

"Unfortunately, the Internet is a latency-filled place."

Collins also commented that cloud-based game systems will need middleware software to be made to have games work more efficiantly with their system, and the possibility that ISPs will employ broadband caps that could keep a limit on how much bandwidth cloud-based gaming systems can use.

"I am also saying that the successful companies will need a LOT of capital and very deep technical talent," he said. "And that’s to just make it a mainstream service."

The industry veteran said it will be years before companies like OnLive will recoup money invested in the service, adding, "For now I’m betting on regular browser games.