In a nutshell: Sega revealed that it is looking into a cloud-gaming service that utilizes an infrastructure it has termed "fog gaming." The concept involves using idle arcade gaming cabinets to serve streaming games to at-home players.
Arcade gaming is still pretty big in Japan. A report by the Japanese Amusement Machine and Manufacturers Association stated there were 15,612 arcades in operation in Japan as of 2016. Sega owns dozens of these gaming centers, and most of the arcade cabinets are networked to Sega's All.Net infrastructure. All.Net allows players to compete, share, and access their high scores from any machine on the network. Even many third-party arcades connect to All.Net for a fee.
A print issue of Japanese gaming news outlet Famitsu reports that since arcades are closed for about eight hours a day, Sega figures it can use that idle time to harness the powers of the CPUs and GPUs in the arcade cabinets. According to Dr. Serkan Toto, who shared the news on Twitter, Sega hopes to deliver "ultra-low latency" cloud gaming to players outside of arcades. This idea would still take a lot of infrastructure work to implement but is within the realm of reason.
Article now with info:— Dr. Serkan Toto / Kantan Games Inc. (@serkantoto) June 3, 2020
- yes, "Fog Gaming" is the "scoop"
- Sega will use arcades in Japan as the technical backbone
- CPUs and GPUs housed in arcade machines are mentioned specifically
- ultra-low latency is touted
- commercial idea is to use arcades outside business hours https://t.co/LWOiYuDAYj
The concept is still in the early R&D phase right now, so there is not much information about what the fog gaming service would entail. Whether Sega intends to stream the physical arcade games to home users or wishes to use the idle processing time to power a more traditional cloud-gaming service like Stadia, is unclear.
"If this allows arcades to serve arcade content when closed, that could be a nice lifesaver for Sega and for the [operators]," arcade owner Adam Prat told Ars Technica.
Not only could fog gaming help Sega's bottom line, it could also potentially save many arcade operators who are struggling to stay afloat during the coronavirus pandemic.
"If it is designed to help operators and has reasonable costs, then it could be a great solution to generating income while closed, which is still an issue for so many in the biz," said Pratt.
However, it's going to rely on how affordable Sega makes it for operators. Many arcades are already dumping All.Net because they cannot afford the fees thanks to lower volumes of business. If arcade owners don't see a way to increase revenues from the service, it will likely not get off the ground.
"One contact I have in Japan was telling me that [All.Net] has been bombing out with the pandemic," said Prat. "Few locations outside of Sega-owned ones were already using it, and now they are dropping it... as the fees make it untenable ... If ops don't get a piece of the payment pie, though, they won't touch it."