Gaikai streams video games the way Netflix streams movies

When Mike Bemiss was looking for a new video game to buy, he hopped on a site operated by Gaikai Inc. and clicked on “Dragon Age 2.”

Within seconds, the 37-year-old engineer from Erie, Pa., was able to play the game right from his browser — with no download, no game console and no credit card. He liked it so much that he bought the game, along with the previous game in the series.

Headed by industry veteran David Perry, Aliso Viejo-based Gaikai operates a streaming service that is like Netflix for games. Users get a free look at the first 15 to 30 minutes of a game that interests them. If they decide to buy, they’re sent to a retailer or the game’s publisher.

“It’s changed the way I shop for games,” Bemiss said. “I can cut right to the chase and see if it’s a game I’m going to like.”

Cloud gaming has been talked about as the next big thing for more than three years. Several companies have already built streaming services, including OnLive Inc., Playcast Media Systems, Tenomichi/SSP’s StreamMyGame and Media Speed Tech’s GameStreamer.

Since then, streaming game technology has become increasingly available to consumers in the U.S. and Europe who have grown comfortable with the idea through streaming music and video. Game publishers are starting to see streaming games as a potential avenue for reaching new players while combating piracy. And even retailers such as Wal-Mart and Best Buy have embraced Gaikai’s try-before-you-buy streaming service as a way to accelerate sales in their stores and on their websites.

“This is how people consume media these days,” said Wanda Meloni, a media analyst with M2Research. “Consumers have gotten used to getting content instantly. What Gaikai is doing fits right into this new consumption pattern.”

Not everyone believes that the market is ready for streaming games technology. Internet delivery sometimes involves a slight time lag. Players of shooter games require instantaneous reaction times. The loss of even a millisecond can ruin a player’s chances in a shooter game like “Call of Duty” or “Halo,” which are among the most popular games on the market.

“Nobody wants to be in the middle of a death match and have the game start to buffer just as they’re about to make a kill,” said Geoff Keighley, executive producer of MTV Network’s GameTrailers TV.

Perry, Gaikai’s chief executive and co-founder, is a 45-year-old Irish-born game developer known for titles such as “Earthworm Jim” and “Enter the Matrix.” He believes that the ability to stream games will be a boost to the $50-billion global games industry. Free from the disc, games could flow to numerous devices that have Internet connections, Perry said.

Gaikai has agreements to stream full games to smart television sets such as the ones coming out later this year from Samsung and LG, as well as to tablet devices including the Wikipad, a gaming tablet that uses Google’s Android operating system and is set to launch sometime before the holidays.

Under current agreements, Gaikai’s game publishing clients — such as Electronic Arts Inc., Ubisoft Entertainment, THQ Inc., Capcom, Warner Bros. Interactive Entertainment and Take-Two Interactive Software Inc. — pay the company a service fee to stream their titles to hundreds of websites, including Facebook, YouTube, Wal-Mart.com, Best Buy and numerous game review sites.

The 4-year-old company is privately owned and does not disclose its financial performance. But its technology is promising enough that it has raised more than $50 million in funding from Benchmark Capital, Rustic Canyon Partners, New Enterprise Associates, Intel Capital, Qualcomm Inc. and others.

In addition, Gaikai has caught the eye of other investors who may be interested in plunking down even more money for a sizable piece of the company, according to people knowledgeable about Gaikai who declined to go on the record because the discussions are confidential. A company spokesman declined to comment on the matter.

Among its potential suitors are large cash-rich Asian companies. Firms such as Japan’s Gree and DeNA, as well as China’s Tencent Holdings, have spent billions buying U.S.-based online game companies in recent years.

Gaikai’s name is based on a Japanese word for the open ocean, a term that suggests limitless possibility.

“Just like the open ocean, streaming allows games to be distributed a thousand different ways,” Perry said. “Players are no longer tied to a console or a high-end computer when they want to play triple-A, high-quality games. They can now do so on any device, even cellphones with 3G or 4G connections.”

The technology shifts the computational heavy lifting traditionally done by game consoles and PCs to servers in data centers all over the world. Users receive a stream of the game, but not the complex underlying mathematical calculations. This is appealing to game publishers because none of the game code is streamed, which means that the games can’t be copied and pirated. And because there is no disc, players can’t resell it to retailers who peddle used games, which returns no revenue to publishers.

“It is the future of gaming,” said Daniel Ruf, a 21-year-old media designer in Nieder-Liebersbach, Germany, who used Gaikai to test-drive a demo of “The Witcher 2: Assassins of Kings,” an action role-playing game. Ruf, who lives in a small hamlet outside Heidelberg, said he values the convenience of being able to instantly “play games at any time, in any place” with an Internet connection via a Web browser.

For game consoles, however, streaming services could be highly disruptive, M2Research’s Meloni said. Console manufacturers such as Microsoft Corp., Sony Corp. and Nintendo Co. make the bulk of their revenue from licenses that publishers pay to have their games on the consoles. When games can be streamed to any screen, publishers may question the need to pay console licenses.

Sony and Nintendo declined to comment for this story. A Microsoft spokesman said streaming games was not “optimal,” at least for now. Nintendo has said its new Wii U console will continue to play discs, and Sony’s next PlayStation and Microsoft’s next Xbox are expected to do the same.

But in a recent interview with British website MCV, Phil Spencer, corporate vice president of Microsoft Studios, said although disc-based games will endure a little longer, “In the long run, we’ll land in a spot where there’s cloud distribution of all content.”

alex.pham@latimes.com