GNi Acquires MMO Hosting Specialist

Global Netoptex, Inc. (GNi) has acquired long-term partner Online Game Services, Inc. (OGSi) in a deal valued in excess of $3 million, the two companies said. The move positions GNi to provide "pay-as-you-grow" game hosting solutions to the fast-growing industry for massively multiplayer games (MMOs).

"Acquiring OGSi is a natural progression," stated Derek Wise, GNi's president and CEO. "By combining their expertise in the games space with ours in managed services, we achieve increased economies of scale and efficiency to better serve our customers."

"Combining our two companies clearly strengthens our ability to serve the game industry with innovative hosting solutions," said James Hursthouse, CEO of OGSi. "We'll also be taking our 'pay-as-you-grow' model into new areas such as interactive TV, video and music services, and social community websites."

OGSi currently has more than 1,000 blade servers packed into 12 cabinets in 365 Main's San Francisco data center. OGSi has been developing its game service provider business model since 2004, hosting sites for Ping0 LLC and GoPets Ltd. with the new Hellgate London online game. With its acquisition by GNi, OGSi expects to have over 4,000 additional servers operational for games clients in 10 datacenters worldwide by the end of 2007.

"We'll be building out these gaming dedicated hosting infrastructure in other data centers operated by 365 Main," said Hursthouse. "Our goal is to provide the industry with every excuse not to build data center infrastructure in-house. It's a drastic reduction in risk and cost. Right now there aren't many publishers that aren't looking at MMOs."

The numbers involves in MMORPG hosting are mind-boggling. World of Warcraft, the largest "virtual world," has more than 7 million subscribers. DFC Intelligence, which specializes in game industry research, estimates that subscription revenue from online games was $2 billion in 2005 and will increase to $6.8 billion by 2011.

The market leader in MMO hosting is AT&T, which hosts both World of Warcraft and Sony Online's MMOs, and has a specialized business unit for this sector. IBM also has a foothold in this market, operating a grid for the sci-fi MMO EVE Online that has supported more than 30,000 concurrent users on a single shard (instance). Valve Software's Steam system, which hosts Half Life 2, Counter Strike and other popular games, delivered 10 million gigabytes of data during 2005, representing 50 billion "player minutes."

OGSi's offering is designed for small to medium sized publishers. "Because of the way we've implemented the infrastructure, we're finding some of the larger companies do the math and are quite interested," said Hursthouse.