Cable at Last Gets Into Game

Apr 17, 2006  •  Post A Comment

Tyrone Lam, president and chief operating officer of interactive gaming company Buzztime Entertainment, sat on a panel in a cramped ballroom last week, getting frustrated.

By a show of hands, his National Show audience was half-full of cable operator executives-potential clients. But his fellow gaming company panelists were politely explaining the reasons why operators have not embraced their services in the past: Set-top boxes were not sophisticated enough, the rollouts of DVRs and video-on-demand have priority, interactive gaming via cable is unproven in the United States.

Finally, Mr. Lam had heard enough.

“This is the third year we’ve sat up here and made excuses for cable operators,” he said. “Why are we talking about tens of thousands of subscribers when we should be talking about tens of millions? If this is important, let’s make it happen. It’s not that tough. Cable is completely missing this opportunity.”

Unlike past years, however, this time the cable industry knows Mr. Lam is right-and the industry is starting to take action.

At the National Cable & Telecommunications Association’s National Show in Atlanta last week, gaming opportunities appeared to be everywhere, from stand-alone arcade games in the convention thoroughfares to a large section of gaming companies on the exhibit floor. Every day press releases announced new deals between cable operators and gaming companies.

Cable, it seems, is finally buying into gaming, but not so much because of a change in consumer demand or new capabilities. Rather, it’s fear.

EchoStar launched a gaming platform last year, DirecTV is reportedly gearing up for a major gaming push later this year and telephone companies are testing gaming services to bundle with their forthcoming video offerings.

“If cable companies don’t embrace gaming, the telcos will,” said Ron Chaimowitz, CEO of PixelPlay. “And the satellite operators are doing it already.”

That very real concern of falling behind the competition makes cable set-top box gaming, a concept that long predates VOD and DVRs, a new priority for cable companies.

A Failed History

“Cable operators have been looking at interactive games as a new revenue stream for a long time, but there hasn’t been one offering that could be rolled out to all the systems,” said cable distribution consultant Cathy Rasenberger, whose clients include gaming company TVHead. “Once they’re able to deploy some strong interactive game options, it’s going to be huge in terms of generating new revenue.”

Advocates note that interactive gaming has been successfully deployed and popularized in most Western countries. Most point to the gaming channels on News Corp.’s United Kingdom satellite provider BSkyB, which offers interactive gaming on more than 11 million set-top boxes. One Sky gaming channel’s viewership is competitive with HBO and MTV. Sky now generates gaming-related revenue primarily through gambling via set-top boxes, but also from viewer purchases of games from its channels.

One reason U.S. cable providers have been reluctant is that several attempts at interactive gaming have failed, starting with Warner Communications’ 1977 Qube trial.

With their hands and bandwidth more than full dealing with consumer demand for high definition, VOD and DVRs, cable operators would probably not be interested in gaming at all today if it weren’t for one key event-News Corp.’s 2003 purchase of DirecTV, which raised the specter of a BSkyB-style gaming invasion.

“With BSkyB, the games seem genuinely well-used, they generate revenue and have staying power,” said Ian Olgeirson, a senior analyst for Kagan Research.

Now Time Warner is back to testing gaming in three markets and, according to a spokesperson, is planning a major push later this year.

Comcast is conducting gaming trials, possibly looking to somehow link gaming efforts to its gaming channel G4.

Though cable operators declined to release details of their latest trials, sources said initial results have been encouraging.

“Certainly some of the early deployments are getting strong usage. People play a lot of the games and play them frequently,” Mr. Olgeirson said. “But the problem with going after the casual gamer is they’re somebody who doesn’t invest a lot in terms of level of interest or how much they’re willing to pay.”

Cablevision is also expanding-and profiting from-its 2-year-old, subscription-based gaming efforts, announcing a deal with PixelPlay last week to offer branded games such as “Asteroids,” “Centipede,” “Sudoku” and “Monopoly.”

If those titles sound unimpressively low-tech, they are-and that might be part of the problem: Most cable games look like refugees from a 1980s-era Atari 2600.


Cable set-top boxes are not designed for gaming. Playing “Pac Man” with a TiVo remote is not what the system is designed to do.

“Set-top boxes are not that bright,” Mr. Olgeirson said.

But they are certainly diverse-which is yet another problem. On most cable systems, games are downloaded by the viewer from the MSO’s server into the set-top box. But boxes vary widely among cable operators, and even among subscribers within each cable system.

“Every time we go to a new cable operator, we basically have to create the game from scratch,” said PixelPlay’s Mr. Chaimowitz.

Another option is to have “server-based gaming,” like the platform offered by SeaChange, a popular provider of cable VOD servers. With server-based gaming, players use the operator’s VOD stream to play a game housed at the MSO. This option permits more modern, graphic-intensive games.

“This isn’t some fancy application running in a set-top box doing magic,” said James Kelso, VP of marketing and communications for SeaChange. “This is like VOD. You can do this on any system.”

Of course, server-based games also have a downside-using the VOD stream hogs bandwidth.

Far more important than graphics, say STB-based gaming advocates, is cable’s ability to offer multiplayer gaming. On cable systems, players can face off against other cable subscribers-or even battle players on other platforms-on games such as Texas Hold ‘Em poker.

“Cable can have people on broadband playing against people on set-top boxes playing against people on mobile phones,” Mr. Chaimowitz said.

Why is multiplayer gaming crucial? Because a satellite signal is a one-way ticket and can provide only a single-player experience-which gives cable operators a potential advantage if they can exploit multiplayer gaming before the telcos invade.

But that’s a big if.

“I walked by the portion of the show floor devoted to gaming and it was twice as big as the room last year, and they didn’t have a section the year before,” Mr. Olgeirson said. “So it’s bigger. But who knows how much that means?”

Daisy Whitney contributed to this report.