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Cloud Gaming Firm Cloud Union Begins Second Round of Funding

Hexun Tech, 8/13/11

Wang Hai, an angel investor in Beijing-based cloud gaming platform Cloud Union revealed recently that the company has begun its second round of financing, after having received a USD 2 mln investment from Softbank China Venture Capital last year.

Cloud Union founder Danny Deng (Deng Di) said that the company team began R&D on cloud gaming technology in 2008 and officially formed a company in 2009. The company has since grown to more than 60 employees in Beijing and Hunan. Deng outlined the underlying concept of Cloud Union's game offerings: all processing for the game takes place on cloud servers and is transmitted via compressed video streams to the user. Only video - rather than executable code - is transmitted to players, whose commands are transmitted to the servers for processing. The structure allows users to play large-scale games even on computers with relatively low-end hardware. Responsiveness and video quality were two key problems for Cloud Union, Deng said, but the company has now reduced average lag time to less than 40 ms.

Wang said that Cloud Union would focus on development for IPTV and PC platforms over the next half-year. Hangzhou-based DTV and IPTV operator Wasu Digital has signed an agreement with Cloud Union under which it could offer cloud gaming services over its IPTV networks as early as Q3 of this year. Cloud gaming would be offered as a premium channel or as an IPTV subscription plan option, Deng said; subscription revenues will be split between Cloud Union and Wasu.

When Cloud Union released its first PC client this March, Wang said, the company opted not to promote the product for fear of overloading its servers. At present, there are around 25,000 active users of the platform. The PC client currently focuses on large-scale single-player games. Cloud Union has secured the rights to more than 60 Chinese and domestic games, and has plans to develop an iTunes App Store-like store allowing game companies and independent developers to publish cloud gaming products on their store under a revenue-sharing agreement.

Besides initial R&D costs, Deng said, server costs are Cloud Union's biggest expenditure, with approximately 100 servers in Beijing, Hunan, and Zhejiang. As the number of users increases, Cloud Union will have to open more servers. Currently, most major online gaming companies' servers support a maximum of about 1,000 concurrent users, while Cloud Union's support only 100 players per server. The company hopes to grow to 2,000 servers next year, Deng said, allowing it to support up to 200,000 concurrent users. For the remainder of this year, the company's focus will be on promoting its services and increasing its user base.

According to Wang, the key potential customers for cloud gaming will be users of ordinary, mid-range PCs, televisions, mobile handsets, and tablet computers. Owing to issues of network speed and interaction, however, Cloud Union is not currently planning to support mobile handsets.

Keywords: Cloud Union cloud computing Internet television revenue share convergence wireless online gaming Wang Hai hardware IPTV funding software users DTV active users app store R&D Wasu Danny Deng HR VC second-round TV gaming


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