With Agawi’s New Game Partner Program For Windows 8, Microsoft Bets Big On Cloud Gaming

Little more than two weeks after Microsoft Corp. (Nasdaq: MSFT) partnered with Agawi to step into the fast-growing cloud-based gaming sector with its Azure platform, Agawi is now giving a clearer picture of what, exactly, this might mean for a game industry in the midst of its own financial and cultural upheavals.

On Monday, Agawi announced the Agawi Game Partner ‘AGP Gold’ Program for game and software developers to gain visibility for their products. It offers “select game developers” the chance to partner with Agawi and feature their products on Windows 8’s Agawi app on launch day for Microsoft’s new operating system, Oct. 26.

“By signing up in advance for the AGP Gold program, game developers will have the significant advantage of reaching a massive new audience outside the increasingly crowded iOS sphere and the fragmented Android arena,” a statement from the company said. “The AGP Gold program is an ongoing program to bring developers to Windows 8, but early members will have the unique opportunity of having their games featured in the Agawi Windows 8 app, optimized for the Windows 8 UI, on the inaugural day of the new software release.”

Agawi, whose name is an acronym for the phrase “Any game. Anywhere. Instantly,” is one of a number of cloud-based gaming services such as Sony’s recently acquired Gaikai that have gained prominence as traditional video game developers and publishers struggle with slowing retail sales of boxed products.

The benefits a cloud-based service offers developers, publishers and customers alike are twofold, Agawi CEO Peter Relan said in a phone interview. On one hand, it helps allay piracy concerns for publishers who fear that physical discs or digital files can be too easily copied, stolen or otherwise manipulated. By narrowing access to the products to a user’s smartphone, PC, or tablet itself, it locks users into the devices they already own and makes illegal distribution much more difficult than before.

The second benefit lies in the steep production costs from which both consumers and developers suffer.

“The cost of building [a game] for 15 platforms -- three consoles, three, four tablets, two or three mobile phones and a PC,” has expanded to the point where game development becomes a prohibitive venture for many aspiring and independent designers, Relan argued.

“If you’re a publisher, you have to not just build the game once, but actually run it,” he said. “Today, everyone understands that games are a service. So now imagine four or five code-bases that you have to update. It’s astronomical! You can’t sustain that.”

While many industry analysts and developers admit that the game industry is inevitably transitioning into entirely digital media, the recent collapse of cloud gaming pioneer OnLive, coming shortly after its own console-based partnership was announced, did not help confidence in the up-and-coming marketplace. And many prominent game developers such as Valve’s Gabe Newell and Mojang’s Markus Persson have been openly critical of Windows 8's restrictive capabilities as a gaming system, leading to the natural question of why a game studio would support the service so enthusiastically.

But Relan maintained that OnLive’s problems had more to do with that company and its faulty business practices than cloud-based gaming itself. Comparing the company’s ill fate to Apple’s botched attempt to launch a cloud-based music service with Lala Music three years ago, he pointed out the proliferation of new music services today such as Pandora and Spotify.

“They were just too early,” Relan said of OnLive. "I’ve heard that their idea of cloud-based gaming was when they did a trial in England, they had to put servers in planes and fly them. At 37,000 feet, that’s one kind of cloud computing. But it’s a different kind of cloud computing.”

Today, Relan said, every major game company is developing “high-end, graphics-capable cloud gaming” to rival the work being done on consoles and PC towers, an infrastructure that didn’t exist when OnLive was formed nearly a decade ago.

Relan noted that at this point cloud services like his company’s benefit the most from being platform agnostic to the point where they can extend the reach of their product to any prospective hardware developer -- be it a smartphone manufacturer or a major video game console maker like Microsoft. The company’s first name, after all, was “iSwifter,” a fitting moniker given the fact that it first created its business by offering browser-based games for the iPad.

“The economics are so compelling that OnLive is a blip in the evolution of this industry,” Relan added.

“There’s going to be a lot of innovation in this space,” he concluded. “Make no mistake about that.”