Gaikai Inc. is a startup, but its customers and backers have been around awhile.
That’s been a key to the Aliso Viejo online gaming software maker’s ability to raise $48 million, including a $30 million round of financing earlier this year.
Give an assist to chipmakers such as Santa Clara-based Intel Corp. and Qualcomm Corp. in San Diego, both of which are among Gaikai’s financial backers.
Behind all of that is a system Gaikai developed to store game demos via cloud computing and stream the content directly to consumers. Demos can be accessed on computers, tablets and TVs without the need for a set-top box of any sort.
Officials tout the user experience as uniquely glitch-free.
“That’s what differentiates us,” said Nanea Reeves, who left Redwood City-based Elec-tronic Arts Inc. a year ago to join Gaikai as chief product officer. “That is really the secret sauce of what we solved.”
Gaikai competes with the much-larger OnLive Inc. in Palo Alto and other rivals such as Sherman Oaks-based Otoy Inc., Spoon of Seattle and Israel-based Playcast Media Systems on online gaming via the cloud.
Wal-Mart
Gaikai partnered with Bentonville, Ark.-based Wal-Mart Stores Inc. earlier this year to stream video games on walmart.com’s Gamecenter, where visitors can test games and then buy them, get previews and preorder hot titles.
It also has a deal with EA, which makes the popular Madden NFL and Tiger Woods franchises. Gamers often don’t realize Gaikai is behind the technology.
The company targets businesses and helps them create new sales channels for prospective buyers who can test games for 10 to 20 minutes. In the popular Sims franchise by EA, players can build their own city for up to 90 minutes.
“It’s a very simple thing for a website to implement or launch a game from a page,” Reeves said. “We can help our partners in the gaming and online retail industries make this digital transition.”
She wouldn’t discuss sales figures but said the company has started to bring in revenue as it moves from research and development to a viable business model.
Growing demand amid this digital shift has prompted hiring and expansion.
Gaikai has added more than 50 employees in the last year, primarily engineering jobs, according to Reeves.
It now employs nearly 80 people and plans to expand operations in Aliso Viejo with another floor of office space.
“Our big focus is on growth and scaling worldwide,” Reeves said.
Gaikai raised $30 million from some big industry players earlier this year to push the rollout of an interactive cloud network. There, games are computed in servers and then delivered to players through high-speed Internet connections.
The third-round funding was led by Silicon Valley venture capital firm New Enterprise Association. Other backers included Qualcomm, Benchmark Capital in Silicon Valley, Santa Monica-based Rustic Canyon Partners and Intel Capital, the chipmaker’s venture arm, and a previous Gaikai investor.
Tempe, Ariz.-based business software maker Limelight Networks Inc. has been a prior investor as well.
Quick Service
Gaikai is aiming to establish lots of servers around the world to provide quick service to users.
The name of the company in Japanese translates to a large open space that can be explored, à la the Great Wide Open.
Its sights are big: reaching an audience of 100 million people.
Today its technology is powering games on a handful of retail and video gaming sites accessed by more than 10 million players. The company expects to add at least 15 more sites under its umbrella by the end of the year, according to Reeves.
Gaikai plans to expand its revenue stream next year by launching gaming channels for its partners through the Internet and TV, and opening up sales channels by subscription, on a cost-per-use basis or as a revenue-sharing agreement, according to Reeves.
“We have all those deals in place,” she said.
The publisher will maintain pricing control for games, marketing and the product launch.
The video game market of late has been dominated by creators of online games, such as top video game maker Blizzard Enter-tainment Inc. in Irvine.
The company behind the popular World of Warcraft and Diablo titles plans to release three games in 2012, a first for Blizzard.
It remains to be seen if cloud gaming can amass adopters in the online gaming industry and rattle the traditional retail market in favor of digital distribution, akin to the music and movie industries.
Reeves likes Gaikai’s chances.
“In the end, it could end up being revolutionary in the business,” she said.
