Happy Cloud Taps the Cloud to Speed Up Video Game Downloads

UPDATED. Cloud gaming services like OnLive and Gaikai may ultimately prove successful in tapping the Internet to deliver instant streaming video games. But Happy Cloud, a Cambridge, Mass. startup, believes the answer isn’t pure cloud gaming but intelligent progressive digital downloads that leverage the cloud to make PC games playable within a few minutes. The goal is to make video game downloads as on-demand as videos on Netflix (s nflx).

Happy Cloud, which is launching Monday in a semi-private beta, is the brainchild of Jacob Guedalia and his brother David Guedalia, who founded iSkoot, the mobile communication app start-up which Qualcomm purchased last year (s qcom). The Happy Cloud service works by tapping the cloud to get AAA games running within minutes while downloads are completed in the background. Video services have done this for a while, but it’s been harder to do this for video games because they’re not linear, but are interactive. Happy Cloud achieves this by using a virtualized file system to pre-install a game in the cloud, eliminating the need for a user to go through an installation process. Consumers just load up Happy Cloud on their PC one time and then when they buy a game, the service begins sending the data in the order it’s needed so players can get started right away instead of waiting for the download to be completed.

Instead of waiting a few hours or more to download a large title, gamers can be up and running quickly, opening up the potential for impulse buys. And it offers the ability for gamers to try before they buy. Happy Cloud said a typical 8.5 GB game can be played in 4.3 minutes on a 10 megabit per second connection, compared to more than two hours for a complete download.

“If you can get it now or later, why not get it now?” asked Jacob Guedalia, who is still working at Qualcomm.

Guedalia said this is the way to best use the cloud to deliver video games. He said cloud gaming efforts will run into problems paying for bandwidth and reducing latency, but downloads offer a host of benefits, especially if you can make the pay-off immediate. Gamers can own the game without any loss in resolution, and they can play offline if they want. And there are no concerns about broadband caps or latency. These are similar issues as those raised by critics of streaming video services.

Happy Cloud has lined up gaming publishers Warner Bros. Interactive Entertainment (s twx), Frictional Games and Paradox Interactive as launch partners. Publishers will be able to offer their games through Happy Cloud with no effort. The upside for publishers is they can remove much of the lag involved in downloading a game, providing something akin to a cloud-gaming experience complete with free trials and try-before-you-buy offers.

For now, Happy Cloud plans on offering games on a per-download basis at prices similar to competitors. Within the next 90 days, it’s looking at offering rentals and subscriptions. The service can also work for console games, which is something Happy Cloud is hoping to enable later this year. Games, however, won’t be available on the first day they become available on other download sites, because it takes about a week for Happy Cloud to index a game and optimize it for fast downloads. That could be a turn-off for gamers looking to get into games immediately on the first day of availability. But the hope is that it could still be helpful in convincing many gamers to try a title, similar to the way people pick up flash games.

UPDATE: Happy Cloud said it does take time to index a game but the company expects to have early access to games like other download services so they will be able to offer games on day one of availability.

Happy Cloud has raised $1 million so far from Jesselson Capital and Miles Gilburne, a former Warner Bros. board member of Time Warner Inc. Guedalia expects competitors to try to copy Happy Cloud, though he claims to have solid patents and a four-year head start on the field. Guedalia said Happy Cloud is open to licensing the technology to other digital download providers. If Happy Cloud proves successful in driving downloads, it could be an appealing pick-up for any number of online retailers or gaming publishers. I have my doubts about a solution that aims to speed up downloads but will not be able to offer games on the day and date of a big title release. But I think that it’s got some good ideas, trying to blend digital downloads with some back-end cloud work to satisfy the increasing on-demand expectation of consumers. We are still waiting to see how OnLive and Gaikai perform over time but Happy Cloud could be a good alternative.