Playcast may not be the most familiar name in the video game world, but it’s one that’s certainly turning the heads of venture capitalists.
The cloud gaming company has raised $10 million in a Series B funding round to help it expand its ongoing rollout of services to telecommunications companies and cable television providers. The company previously raised $2 million in funding in 2009.
Unlike OnLive, which is making an effort to brand itself and offer a commercial service, Playcast is approaching cloud gaming as a white label company, offering a service that can be integrated into existing set-top boxes and telecom web sites, letting customers pay just one bill when they download games.
And rather than tackling the U.S. market initially, Playcast has instead decided to focus on overseas markets where console penetration is low, which it hopes will result in a larger initial user base. Presently, the company is only operating in Portugal. It plans to announce an Asian partner soon, followed by two Western European markets.
“To be honest, the world is pretty big and there’s a lot of work to be done, Playcast CEO Guy de Beer tells Gamasutra in an interview. “With North America, the timing isn’t right for us right now.”
The delay into the U.S. market will also give the company time to polish its user interface, which investors realize is critical to any Western success, says Yair Landau, a new member of the board at Playcast and a partner in MK Capital, one of the companies contributing to this investing round.
“The company is in its initial rollout,” explains Landau. “Our vision is to help the company drive and improve the service. We’re launching it in a smaller market to get our feet wet and refine it before we launch in a bigger market.”
Landau comes to the table with significant experience. He founded Sony Pictures Digital, which included Sony Online Entertainment, in 1999. SOE reported to him until his departure from the company in 2008.
While the initial focus for Playcast is integrating with cable operators, de Beer says it is not losing sight of the long-term picture. Over-the-top plays, like the one OnLive is attempting to capitalize on currently, will eventually become a significant part of the market, he acknowledges.
“Because we’re standard-based, all those televisions and Blu-ray players are going to be easy for us to integrate with,” he says. “We have other tactical reasons we’re not pursing that market … right now. Going forward, though, it will be useful for us.”
As for when he thinks over-the-top will become a significant player in terms of revenue... well, that’s when things get a little fuzzier.
“I don’t think anybody in the industry knows,” he says. “I think things are progressing very fast, but there are still some very, very significant things that need to happen for the market to mature. There’s no leading horse in that race. Everyone’s just running around in a different direction. It’s too difficult to assess correctly. For the time being, there’s revenue to be made on the existing systems.”
While the company is allocating much of its new cash infusion to improving and expanding its service, it’s not planning to earmark much, if any, of that money to expand its publisher base. To date, Activision, THQ, Disney, Konami and Warner Bros. are among the bigger companies on board. And for now, that’s plenty.
“We have quite a number of smaller publishers for more casual games as well, and we have some more deals in the pipeline with medium[-sized studios],” says de Beer. “Right now, we have quite a lot of content which is fairly new. So our priority is in building up the user experience and getting more and more traction within markets. … We’re in pretty good shape on the content side.”
Even with the content library, Playcast knows it’s not ready to compete on a broad scale right now. And it’s OK with that. With this investment round, the company says it hopes to take another step towards maturity, so it can be ready when the market for its services really begins to take off.
“We still have a long way to go in refining the product,” says Landau. “This is a long way from being an Xbox Live or PlayStation Network, but it’s a great platform and our money is here to take it to that next level.”