The video games industry is at a pivotal point where interoperability is emerging as a distinct part of the industry, reshaping how some hardware and software ecosystems interact.
As the industry continues to expand, with over 3 billion active video game players, the move towards cloud gaming and the proliferation of cloud gaming platforms highlights the necessity for a unified approach to technology and licensing. This may pave the way for a fair, reasonable, and non-discriminatory (FRAND) licensing regime.
Cross-play
The shift towards a more interconnected gaming experience encompasses cross-play and cloud gaming, underscoring an industry where video games are more accessible and offer a more seamless experience across different devices, platforms, and environments.
Cross-play refers to the ability of video games to allow players on different platforms to play together in the same game whilst cloud gaming is characterized by its cross-device, cross-save and cross-platform capabilities, offering seamless experiences across various devices via internet connections to any device with a web browser.
The expectations for a seamless gaming experience are higher than ever. In the console market, developers, publishers and platforms had historically been reluctant to integrate cross-play functionality, keeping player bases separated for different consoles. However, cross-play is now becoming more normalized.
2017 marked a change when Rocket League was released for the Nintendo Switch and shipped with the ability to play against Xbox One and PC players. While PS4 support was technically feasible, Sony’s guidelines prohibited cross-play at the time. In September 2018, Sony announced "a major policy change" by embracing cross-play.
Since then, the 2024 Unity Gaming Report, published by cross-platform game engine Unity this year, reported that cross-play is a top priority for game developers, as 95% of studios with more than 50 staff members are prioritizing cross-play as a feature.
Integrating interoperability can create additional value for players by improving compatibility and connectivity as players can access the same games and features across different devices or join online multiplayer sessions with friends who use different platforms.
Interoperability is not always feasible or desirable; for example, in competitive e-sports cross-play gaming is inherently imbalanced as there are clear benefits of playing first-person shooter games on a keyboard and mouse compared to a console controller. Closed ecosystems can also provide players with significant benefits by offering a more exclusive and customized experience. This in turn results in a stronger brand identity and customer loyalty, as developers can design games and features that are optimized for a specific platform and its hardware capabilities.
This also allows them to monitor and regulate the ecosystem more easily by ensuring better stability and security, leading to an improved gaming experience. More generally, developers need to consider the extent to which interoperability is even desirable in certain contexts.
Exclusivity should not be totally neglected, as there is clearly room for both cross-play and exclusive titles in the video game industry.
Interoperability
As we look to the future, cloud gaming, currently characterized by distinct, platform-specific services (such as Microsoft’s Game Pass and PlayStation Plus Premium), appears poised to mirror console gaming’s trajectory, with interoperability becoming increasingly viable and desirable for some stakeholders.
The perceived importance of cloud gaming was made apparent when the UK-based Competition and Markets Authority (CMA) rejected a remedy to license Activision’s cloud gaming rights to all third parties during the investigation into Microsoft’s acquisition of Activision. In its final report, the CMA essentially rejected the proposal because of the lack of interoperability; the games would not be available on platforms competing with Microsoft’s Game Pass and outside a Windows ecosystem.
The acquisition was eventually approved following commitments by Microsoft to license certain cloud gaming rights to competitors such as NVIDIA, Boosteroid, and Ubitus.
Whilst Microsoft’s longer-term mission is to make Game Pass available on all mobile, PC, console and online platforms (including those belonging to competitors), some platform-holders are not yet receptive to that idea because of the benefits of operating a closed ecosystem.
In addition, cloud gaming technology is still in its nascency and currently faces some challenges, such as high bandwidth requirements, latency issues, data privacy concerns, and dependence on internet connectivity and service availability. These issues can affect the quality and reliability of the gaming experience and deter some players and developers from adopting the technology.
For example, in 2023, Google’s cloud gaming platform Stadia was shut down as the platform was plagued by latency issues and was stifled by its lack of games in its library, along with the growing competition from other stakeholders in the industry.
Microsoft’s Game Pass is now the frontrunner with over 34 million subscribers as of February 2024, and competing platforms are contending to patent cloud gaming technology.
Microsoft has applied for cloud gaming-related patents such as ‘Enhancing gaming content for previously developed gaming applications’ and ‘Tracking in-game events and generating event reports across multiple gaming applications’.
Sony also owns cloud-related patents for ‘Browser-Based Cloud Gaming’, ‘Pass-through device for cloud gaming’, ‘Multi-user demo streaming service for cloud gaming’, and ‘Multi-tenant sharing of graphic processing resources between multiple applications’.
Embracing standards
The shift towards interoperability in parts of the console market has underscored the growing importance of technical standards and standard-setting organizations (SSOs) in the video games industry.
Consoles have become increasingly multifunctional as they are now expected to have wide-ranging compatibility. As a result, studios and manufacturers have already had to contend with technical standards associated with video games hardware and the fair, reasonable, and non-discriminatory
(FRAND) licensing of standard-essential patents (SEPs), such as those at issue in the 2012 US dispute between Microsoft and Motorola (C10-1823JLR) regarding appropriate licensing fees for certain SEPs concerning Wi-Fi and video compression which were used by Microsoft’s Xbox 360.
As cloud gaming becomes increasingly viable from a technical standpoint and more widely adopted, SSOs (such as the IEEE Standards Association) are calling for the development of technical standards to address issues such as connectivity, latency, interoperability, security, and copyright protection (amongst others).
These challenges highlight the need for open standards that can enable compatibility, connectivity and a cohesive user experience across cloud gaming platforms. Whilst cloud gaming is transforming the way games are played and accessed, the extent to which interoperability will be integrated remains to be seen.
Developing and adopting such standards requires the involvement and support of all stakeholders, including small game developers, who often lack the knowledge and resources to participate in standardization processes and who constitute the majority of the game developer community.
By engaging and incentivizing small game developers in the standardization process, the industry can foster a more inclusive and diverse gaming ecosystem, which can enhance user experience and meet the growing expectations of players who often demand a more seamless gaming experience.
Moreover, by participating in the standardization process, publishers and developers can also influence the direction of technological developments and promote the adoption of their own IP, which may become essential to the relevant standards for cloud gaming infrastructure and thus generate significant licensing value as SEPs in the future.
FRAND determinations
Looking to the future, efficient licensing of any such SEPs will be key to the success of the standards that are developed in the cloud gaming space.
Video games may not be as closely associated with FRAND licensing mechanisms as the telecoms industry, but the ‘spirit’ of FRAND – interoperability - is closely integrated with the past, present and future of video games and, in particular, cloud gaming.
Establishing FRAND licensing regimes in video gaming is contingent upon the industry’s willingness to collaborate on standardization efforts. Such regimes have the potential to foster innovation, competition, and accessibility by ensuring that essential technologies are available to all market participants, including small developers, publishers, and platforms on FRAND terms.
Through collaboration and a commitment to fair licensing practices, the industry can navigate the challenges of interoperability and set a course towards a more connected and accessible gaming world.
This article was first published in ManagingIP on April 4, 2024
