Valve's Gabe Newell skeptical of cloud gaming potential

If you're holding out hope for a cloud gaming initiative within Steam, don't bet on it. Valve managing director Gabe Newell is not a fan of the service, saying during his DICE 2013 keynote today that it is "more of a feature for demos and spectation, and not as a core architecture for delivering value to consumers."

Newell said that cloud gaming is great for caching and saving on network resources, but ignores the fundamentals of IP costs. "There's always this 'let's ignore the fact that you have this network cost,'" he said. "Cloud gaming works until it becomes successful, at which point it falls over from its own success. As soon as everyone starts using a continuous network connection to get its applications, consumer IP pricing is going to go through the roof."

He also said that latency is a problem with the service in that it puts compensation for it at the center of the network instead of on the edge where he thinks it belongs. "We believe that latency sensitivity is going to increase in the future," Newell said. "The ability to do local high-speed processing will become more important than it is right now... We actually think there is going to be a bunch of hardware in the future where you have more sensitivity than a human does to latency and putting that functionality at the center of the network will actually be impossible."

In the end, Newell said he will continue to be skeptical of the whole process. "If you really just want to have a standard client out there that's not a full-blown game engine, there are much better approaches than sending video."