The future of online gaming is 5G, and a high-profile stumble by competitor Google doesn’t concern the company behind Angry Birds. Rovio’s Hatch Entertainment thinks it’s got the secret to success, and VP Nick Thomas tells me that telecom companies and developers should work together to leverage the technology.

Below is a transcript of their conversation.

Michael Hainsworth: The blue skies for cloud gaming darkened in 2019 after Google’s Stadia stumbled out of the gate. Reports of lag over 4G networks tarnished the reputation of an industry set to explode thanks to 5G. Hatch Entertainment believes it’s figured out the formula for mobile gaming in the cloud. And a combination of emerging technologies tied to 5G will only make the experience better. I had a chance to sit down with Vice President Nick Thomas to look into the future of pew, pew, pew on our glowing rectangles. We began by addressing the question, is the world ready for cloud gaming?

Nick Thomas: All right, yeah, we’re just gonna cut right to it aren’t we? Okay. I’m drinking the Kool-Aid, of course, because of the role that I’m in and the company that I work for. And yes, the answer to that question is yes. We’ve seen a clear evolution in nearly all other forms of digital entertainment. Video obviously has moved from the old days of cable TV or walking to Blockbuster.

CLIP: “Bonus Card Plus from Blockbuster video. Rent 11 videos, get the 12th video free. And enter to win a corvette convertible.”

NT: To at one point you had DVDs sent to you.

CLIP: “If you don’t watch a lot of movies you may never learn certain valuable skills.

– What are we gonna do with it?

Like how to dispose of a body. But, if you watched a lot of movies you’d know.

– What do we do now?

– Let’s go eat.

– You gotta touch me every time you talk to me?

Netflix, all the DVDs you want, $20 a month, and no late fees.”

NT: And then finally the technology caught up to the point where you could just stream your content. And that is more and more the case, as we see cable TV dying off with different streaming services replacing them. And music had a somewhat similar evolution with all the streaming services that are in market. 

Gaming has always lagged behind, and that has primarily been a technology issue. It’s been attempted in the past. It’s never really worked, although there’s been a lot of interest and excitement and investment. It never really delivered the quality of experience and the features that are important to the gaming community. 

We are at a time now, at this pivotal moment, where the technology has finally arrived, and the ecosystem is embracing this new movement toward streaming. So the long answer is yes, this is, I think, the moment we’ve been waiting for game streaming to really become mainstream.

MH: How does Hatch Premium and Sprint mobile 5G work?

NT: Hatch is not exclusive to Sprint 5G. It’s not a Sprint product per se. We are a stand-alone streaming service that is live, globally. So in the U.S. Sprint is our launch partner, but it’s good to understand that we’re not limited to Sprint, we’re also available in Europe, where we’ve partnered with Vodafone. We’ve launched in Korea with SKT, South Korea Telecom. And in Japan with Docomo. So we’re operating a global service here. 

And with Sprint, Hatch is a mobile game streaming client. So this is, for lack of better terminology, Netflix for games, but built and designed to be a natively mobile experience. So in that way, we’re quite different from Stadia or what Microsoft has announced with xCloud and other services coming to market that are cross-platform, and for the most part, PC gaming replacements or console gaming replacements. That is not our angle at all. We’re very focused on the mobile use case. And because mobile is our primary target device and user, we’ve built Hatch to be a 5G service. Now you don’t need 5G for Hatch, but 5G provides the best user experience and really creates the optimal environment for game streaming.

Gaming has always lagged behind, and that has primarily been a technology issue. 

MH: So is it streaming the actual games? Is this Edge Cloud technology where all the heavy lifting for the rendering and for the “I shot you, no you shot me” type of thing, is that all taking place in the cloud, or because it’s mobile and mobile-exclusive, are we downloading something that is doing the heavy lifting on our devices?

NT: Yeah, good question. So this is all in the cloud. This is true game streaming from the cloud. We have a distributed edge of data centers that are all around the world in the markets where we’re active. And we are streaming the content from the data center, from the cloud to the end-user device. Now, the technology is interesting. You’re don’t downloading any games. None of the content is being downloaded to play on the device.

MH: Hence the Netflix for video games analogy.

NT: Yes.

MH: I’m not storing the movie on my phone.

NT: That’s correct. You’re not storing it on your phone, you’re not downloading it onto your phone. You’re purely streaming. But the way that we handle the streaming is unique. 

What everyone has done in the past, and what our competitors continue to do is a video-based streaming approach, which is what you alluded to in your question, where you’re running the game using the CPU in the cloud, and then you’re rendering and encoding in the cloud and sending a compressed stream to the device, and then decoding on the other side. And that’s a very latency-prone way to approach streaming because of the encoding and decoding and heavy video stream that is involved in that process.

MH: Sorry, just to put you on pause for a second, it sounds like there’s a horse walking around in the background.

NT: You know it’s funny, it’s my dog drinking. She doesn’t drink all day, and then when she drinks, she drinks the entire bowl of water.

MH: Well, we can wait.

NT: I think she’s done.

MH: Okay.

NT: Sorry about that.

MH: That’s okay. So you were talking about the latency.

NT: Yes, so that’s a video-based approach. What Hatch is doing is quite unique and proprietary. And we are not sending a video stream to the device, we’re actually sending rendering commands. So this is called command streaming, and what that means is that we’re running the game on the cloud using the CPU to do all the processing of the game data and all the heavy lifting on the compute side. And we’re streaming the rendering commands and using the GPU on the phone to do the rendering, and rendering in real-time. 

So another way to think of this is that we take your phone, and we take the CPU and the GPU, and we separate those two things and put the internet in between. And this provides a ton of interesting benefits for mobile streaming. The primary benefit is that you don’t have this video issue to contend with in terms of the bandwidth, in terms of the encode and the decode and the compression protocol, and the bandwidth requirements.

MH: You don’t have to worry about sending a 4K video file down the line and then the latency that comes with it. “I aimed at your head, I shot, but by the time the bullet made it to you, you were gone.”

NT: That’s right, yes. All of that is resolved. And so what you’re really dealing with from a latency perspective is just effectively the speed of light end-to-end latency of delivering that rendering command. Those relatively lightweight simple commands of moving pixels around on your phone and that’s a much lower latency approach. Of course, there is latency. You have to get the speed of light from the data center to the end-user device, and there’s a lot of magic and wizardry that we do to optimize that routing in the core network, and that’s a big part of our edge strategy when it comes to data centers is to bring the compute as close to the user as possible. 

To get back to your earlier question regarding Sprint, this is one of the reasons why we chose to launch with Sprint in the U.S. Everyone is launching 5G networks and we’ve been speaking to all of the carriers and telcos, and doing our due diligence and investigating the pros and cons. And we chose Sprint because they have this dedicated approach to their 5G rollout, and have done a lot of work with us actually to optimize their network, to ensure that streaming will provide this high-quality experience for the user. And that all these problems that have plagued game streaming in the past are attended to within the network conditions that the user is streaming on. 

So it’s been a great partnership because it’s been very bidirectional, where it’s not just our tech on their network, it’s been worked between the two of us to actually optimize those two to provide the best possible experience for the user.

The latency benefits that have been promised in the 5G evolution are, I would say equal portions hyperbole and reality.

MH: So I guess as far as the benefits of using 5G are concerned, there are a whole bunch of different use cases for 5G. It’s a very low-latency, very high-speed connection, and very low power. And I can imagine a low power thing works well for industry 4.0. The high speed works very well for video streaming and things like that, autonomous vehicles or Netflix. But I guess for you, it’s that ultra-low latency of going from 100 to 120 milliseconds down to one to two milliseconds that really is the power of 5G for you.

NT: Yeah, let’s unpack that a little bit because the latency benefits that have been promised in the 5G evolution are, I would say equal portions hyperbole and reality. The promise of one to two to five milliseconds of latency is true in that it’s a promise and that the potential for that does exist, but today’s 5G is what I kind of think of as 5G 1.0, which effectively means that it’s a 5G antenna or small cell, and a ton more data being pushed through the network, but it’s using the same LTE infrastructure that’s already been servicing 4G for the last 10 years or so. So the benefits of 5G latency are not here today. This is something that the industry is working on and it will require its own dedicated, separate network infrastructure, which is something that’s being built but is not yet deployed. 

Hatch, today, is running effectively on LTE on steroids, meaning that the latency of the network is still under the profile of an LTE network, but there’s a ton more throughput. Now, for us, because we don’t have this video burden, we’re able to actually stream quite well on the existing latency within the LTE network. And from this point, it only gets better. It only gets tighter and improves. When it comes to the latency profile today, what we’re seeing is actually less, you know you mentioned 100 to 150 milliseconds for LTE, what we see is actually much closer to 40 to 60, so that’s a typical environment. 

With certain carriers and in other countries, you’ll see closer to 30 milliseconds of round trip latency. And for us, anywhere in that range, we’re flying pretty smooth. We’re getting close to 60 frames a second and we’re really actually cruising quite well. As you drop down to sub 20 milliseconds, that’s where you have this sort of fully unlimited experience. And that means that the quality of the interaction with the game is entirely native feeling, as though there’s absolutely no noticeable latency at all. It also allows us to run higher graphically more intense games through the service. Because of our technology, the benefit is that we get this amazing low latency, low bandwidth streaming relationship between the CPU and the GPU. 

One of the challenges is that as you get into really graphically-intense games where there’s tons of particles, lots of shaders and a lot of data being pushed to that GPU to render, that connection and the requirement for low latency and high throughput becomes more demanding. Now mobile games don’t tend to actually fall into that category very often. Mobile games tend to be different from PC console experiences, where actually a lot of the load is pushed to the GPU. PC brigs, computers, have these big beefy GPUs to handle a ton of compute.

MH: You don’t need to tell the guy who just dropped $1,400 on an RTX2080TI.

NT: Right, there you go. The PC world is quite different from the mobile world. And this again is a very important discrepancy between mobile streaming, mobile games and what we’re doing versus the Stadias and xClouds and other solutions that are coming to market.

MH: Well then let’s talk about that. Why did you choose to go mobile-exclusive when you could have targeted all of the platforms, not just the little glowing rectangle I’ve got in my pocket.

NT: Yeah, well that’s a great question. So one answer is just our heritage. So Hatch is a spin-out of Rovio. Rovio is the Angry Birds company. And so our core DNA is from the mobile game world. We know mobile games really well. We’ve built some of the biggest brands in the space, and so it’s part of our DNA. 

The other reason is that we see the mobile market as the biggest market and the fastest-growing market. 2019, according to Newzoo reporting, gaming as an industry hit $150+ billion in terms of revenue. 54% of that was attributed to mobile games. And the percentage we’re seeing in year-over-year growth, that’s substantial, you know 11, 12, 15% growth year-over-year in terms of revenue and number of players and excitement in gaming. And we’re seeing 20% or more growth year over year in the mobile space. So the industry at large is growing, but mobile is growing faster than any other segment. And it’s also the largest in terms of user base. 

We’ve got, in this country alone, there are over 100 million monthly active users. 65% of American adults play games and that’s just looking at 18+ data. So if you factor in kids, you’re looking at 75- maybe 80% of Americans as one market being mobile gamers, or being gamers rather. And of that large demographic 60% choose their smartphone as the primary device to play games. So it’s a combination of our background and just the market opportunity that we see as being most interesting, from the business point of view, in the mobile space.