After a two-year stint at Virgin Games designing and programming video games such as Disney’s Aladdin, Cool Spot for 7UP, and Global Gladiators for McDonald’s, David Perry founded Shiny Entertainment in 1993.

Shiny Entertainment developed a number of hit games, including MDK, Sacrifice, Messiah, Enter the Matrix, and Wild 9, but the studio was best known for Earthworm Jim. Earthworm Jim quickly emerged as a global franchise replete with a TV series produced by Universal Cartoon Studios, a Marvel comic book series, and fast food promotions with the Carls Jr. and Del Taco restaurants. Over the years, Shiny Entertainment has changed hands many times, passing from Interplay to Atari to Foundation 9 and finally to Amazon.

In 2009, Perry cofounded Gaikai, a technology enterprise that built the fastest proximity network in the world, enabling gamers to play major video games with only a web browser. Three years later in July, Gaikai set a Guinness World Record as “the world’s most widespread cloud gaming network,” and Sony Computer Entertainment acquired Gaikai for a staggering $380 million. Today, at Sony, Gaikai’s streaming technology powers several key features of the PlayStation 3 and the PlayStation 4.

Ramsay: Before you founded Shiny, you worked at Virgin?

Perry: Yeah, I grew up in the UK and ended up at Virgin Games in Irvine, California. They had asked me to come out and make a McDonald’s game for them. I ended up making that game, which was called Global Gladiators and won Game of the Year awards. Virgin Games became very interested in trying to see what else we could do. I decided to stay and we ended up making another “advertising” style game called Cool Spot for 7UP.

Cool Spot was based on the red dot from the 7UP logo. Sega published that game and then came back to Virgin with the rights to Aladdin. We made Disney’s Aladdin for the Sega Genesis and that, despite an insane timeline, turned out to sell well. So, this little team had generated an awful lot of money for Virgin and Sega. We thought, “Hmm, maybe it’s time to actually think about doing something different here.”

At that time, I was offered a job to go work at the Sega Technical Institute. I was very tempted by that, but I ended up also getting an offer from Playmates Toys, the people who made the toys for the Teenage Mutant Ninja Turtles. They made a lot of money from the Turtles and were interested in getting into video games, so they asked if I would join to help them do that. I told them, “Well, no, why don’t I start a game company and then you fund it? If you fund it, I’ll give you the first three games.” They agreed, and we ended up with a publisher that was funded and new to video games. They didn’t have strong, preconceived expectations. Playmates really left it up to us to see what we showed up with and they put in a lot of effort to help us find licenses.

If you think about it, they were all licensed, so Playmates expected that we’d just make something licensed. We were off talking to all of the studios—Universal, Sony, and others—trying to find rights for a new game. We were getting very serious about Knight Rider. Remember David Hasselhoff’s TV show and the talking car? We were looking at different properties, but we couldn’t find the perfect fit. We finally agreed that we would make our own title. That turned out to be Earthworm Jim.

Ramsay: Starting a company is arguably more challenging than taking a job. Why didn’t you just go work for them?

Perry: I was interested in having a team and doing our own projects. I was less interested in just being an interactive management guy in charge of other people’s properties, making games I wasn’t so interested in.

Ramsay: Did you have any experience as an entrepreneur?

Perry: Yeah. When I lived in the United Kingdom, I first started at a company called Mikro-Gen. It was a real job, so you had other programmers there and managers. I learned quite a lot there but I was very tempted to see if I could go it alone. I did go it alone and started developing games myself. I put together a team and we made a game called “Beyond the Ice Palace” for five different platforms. I realized that it’s hard when you’re relying on other people.

When you’re just one person, you can get stuff done but when you’ve got five people, you’re responsible for the output of all of them. It was hard, I was naive. I found that to be not so fun. I only did it one time and then I went back to working for somebody else. So, I flipped back to something in between, which seemed like a safe happy zone, where you’ve got some structure around you, but on the other hand, you get to really build and do whatever you really want to do. I like that.

Ramsay: Was starting Shiny Entertainment within your comfort zone?

Perry: I don’t know what it is about me, but I tend not to think too much before I act. If I sat and thought about it, I might have been able to talk myself out of it. I’d have found all these reasons to not move forward. I call it “pointing at the hurdles.” You see all these hurdles and you just sit there and point at them: this is a problem, that’s a problem, and this is a problem. If you don’t do that and just start moving forward, usually you find yourself on the other side, wondering what happened. You don’t even see the hurdles as you’re just going through this whole process. Whatever it takes, it’s just the next step, the next step, the next step, and then, finally, you’re at the end of the track. You’ve built a company and you’ve had to do whatever was necessary. If you needed to raise money, you just did. If you needed to meet certain people in Hollywood, you just did. You found a way. That’s what I like. No matter the stuff we’ve done, and the people we’ve worked with, I don’t know if you could necessarily plan it.

Ramsay: Did you have a business plan?

Perry: No, we did not have a real business plan but we had worked out what it would cost for the team to make a game. We were surprisingly accurate. We had this running joke about how accurate that actually turned out to be because we had made our best effort at working out all of the costs and it actually worked out. It wasn’t a business plan though, in the sense of having fully worked out our marketing strategy and everything else. There were other people taking care of those pieces for us. We didn’t have a plan that you would use to raise money or something like that. It was a little lighter. In fact, we didn’t need a formal plan. That really wasn’t necessary for the publisher we were with.

Our plan was simple: this is how much it will cost to get the game done. They just wanted to have that game, so they weren’t really worrying about how much money we were making. They were more worried about what they were going to do on their end and if it made sense for them. It wasn’t as hard to raise money then as it probably is today. But if you find someone who wants the product, you’d probably still have the same situation today. You’ve just got to find someone who wants it and has their own plans for the software. There is a lot less friction then and it’s not like you’re trying to twist anyone’s arm.

Ramsay: Instead of a plan, you had a clear vision of where you wanted to take your company?

Perry: We had a general idea about how we would do an animated game with the team we had. The team was very, very good at 2D pencil drawn animation. We had done multiple games in a row that scored very high in graphics, so we’d gotten to a point where that was expected of us. We had to deliver something that was graphically very good. Luckily, we had enough talent to deliver. Earthworm Jim received multiple Game of the Year awards. But it wasn’t like we were just focusing on making role-playing games, simulations, or something else. It was very clear that we were going to make some kind of action-oriented animated platform game. The team had a funky style of humor as well, which permeated the final experience.

Ramsay: Was there a point where Shiny Entertainment was just you?

Perry: I was “technically” the original founder but a bunch of people joined me from Virgin. There were a few new people who joined shortly thereafter. It wasn’t like I was sitting in an office with nobody and then slowly trying to recruit people one after another. There was a group of guys who wanted to work together right away.

As the founder, I was responsible for the company; however, I really should have sought advice. Let’s just say there was a lot of learning by making mistakes. The rule I follow now is just to not repeat mistakes.

Ramsay: What kind of commitment did you make?

Perry: Payroll was my biggest concern, so we had to deliver. If I had sat back and thought about it all upfront, I might have not moved forward. The trick is to be able to pivot when something isn’t working. You’ve got to be able to pivot and deal with it in real time. If something’s taking too long, costing too much, or you didn’t get the people you wanted, it’s up to you to find a way to solve that problem in real time.

Ramsay: Did you have a family at that time?

Perry: I did, but no children. It’s funny. It’s another sort of meta theme of the video-game business. The video-game business takes up just about all of your life. The wives and girlfriends were always coming to the office because, at that time, there was no real external life. It’s just work, work, work, work. There’s a movie called Indie Game:   The Movie. Have you seen that yet? You should check that out. It’s a really good way to see behind the scenes of people making games. You could see how much fun it is. You can also see how much spare time they look like they have. It just becomes a way of life.

Ramsay: Who were some of the people who came over from Virgin?

Perry: There were super talented people like Nick Bruty, Mike Dietz, Nick Jones, Steve Crow, Ed Schofield, Andy Astor, Tom Tanaka, etc. It was a small group. I think we hit around nine. Doug TenNapel was a new hire. He wasn’t from the original team, but he came up with the Earthworm Jim character, which was exactly what we needed at the time. If you look at the credits of Earthworm Jim, you’ll see all the people who helped make it.

Ramsay: Had you worked with these people before?

Perry: Not all of them. I worked with Nick Bruty for many years. I worked with Mike Dietz at Virgin. I worked with Nick Jones before in the UK. We had an artist called Steve Crow who was also British. The group was reasonably closely knit. We definitely weren’t like a bunch of strangers.

Ramsay: Did you have to really convince anyone to join you?

Perry: There was one guy who I was trying to get: Christian Larsen. I was very frustrated that I couldn’t convince him to join. He was a key person I really wanted and didn’t get. He was the fish that got away. He did the graphics for the Jungle Book video game for Disney and his graphical ability at the time was just remarkable. He had started a company with somebody else and had to see that through. I still wish he had joined us.

Ramsay: When you brought on the first nine people, you hadn’t done any real planning but you knew why you wanted those people.

Perry: Yeah, you just believe in the people. I think the industry is still that way. Gaikai was formed the same way. You find talent, you bet on the talent, and the talent sets out to make something good. It’s just a case of working out what that is. With really great people, you can make something fresh. The real challenge is not the idea; it’s finding the talent to make it. Once you find them, hold on tight; you’ll get some really good stuff. That’s what happens.

Ramsay: Some game developers want to start a business to make games, so they operate with the expectation that their first game is just one of many to come. Others build teams for that first game and that’s all they care about until they’re forced to care about something else. The difference is subtle but it’s there. Which were you?

Perry: Yeah, I agree. The company was not relevant. It was not about the company at all. The company was a function to make games. There was no one who aspired to build a business. They were all about just making games and getting the next game done and hoping people like it. We very much had a focus on the next game and “this new hook is going to be cool!”

Ramsay:   That latter approach doesn’t usually work out well for many developers, but apparently, that approach worked for you.

Perry: It did. It worked out well. The one thing that happened with Shiny that got funky was the team was very 2D-based and the industry was going 3D. At the time, I was concerned about that.

It’s funny. Someone pointed that out to me recently. That was the one time in my career where I actually sat and thought about things. I actually sat and thought, “Well, this is really concerning and…” Blah, blah, blah. I ended up agreeing to sell the company to Interplay. It’s just funny because the press quoted me recently saying that selling to Interplay was the biggest mistake I had ever made.

So, the team actually had very good 3D chops but they just hadn’t done that before. They investigated 3D, they did an amazing job, and they made MDK, which was very respected for its time. And so we didn’t just come out with a 3D game; we came out with a leading 3D game. I was kicking myself.

I did that another time. I did that with the rights to The Matrix. When they first offered me the rights, I turned them down. I kicked myself pretty hard after that. You can’t always win, right? You make some dumb decisions along the way. Turning down The Matrix and selling Shiny were two of my worst decisions along the way.

Ramsay: How do you know what you need to get the game done?

Perry: You need good level design. You need good art. You need good audio. We outsourced the audio to Tommy Tallarico. Ultimately, you just need to know that you’ve got strong people responsible for every piece. You need to be confident that the game is going to look good, sound good, and play good. That’s your starting point.

Ramsay: What was your first game? Earthworm Jim, right?

Perry: The first game we did was Earthworm Jim. I programmed that on the Sega Genesis. The last game I programmed was Earthworm Jim 2 before I drifted over into the dark side—management.

Ramsay: How did the concept for Earthworm Jim come about?

Perry: My animation director said that he would like to hire a guy, Doug TenNapel, so we decided to give him a test to see if he was good. For his test, he had to design a character and animate it. The character he came in with was Earthworm Jim. If you can imagine, we’re looking at all these different properties and thinking about what to do, and then this guy shows up with a funky worm in a suit. I loved it! I can’t remember exactly how we went about it, but the team just went, “This is great! We could make a game based on this!” And off we went. It was just a completely different path based on seeing something that inspired us.

Ramsay: This is how you determined where to spend your money?

Perry: Are you inspired? Are you excited? Do you have a lot of ideas? I think that’s generally the way game design goes. If the room is filled with crickets and no one’s got any ideas, it’s probably not really working out—whatever the theme you’ve chosen. But if the room is filled with ideas and people are excited about it, then you’re probably onto something. You can just feel it in the room whether you’re onto something.

Ramsay: With Doug TenNaple’s art test, you had your inspiration. What else did you need?

Perry: We had Playmates Interactive, the toy company that was going to become a game publisher. That was great because that’s what we needed. We needed somebody that would just take whatever we built and sell it, and so that’s what they did.

Ramsay: You’ve said that you’re not the type to think through things, but were you ever concerned about Playmates’ experience with games?

Perry: No, that was to our advantage because, if you were to talk to any of the video-game publishers and say you wanted TV commercials, most of them would be like “oh, we don’t do that,” but with the toy company, no one ever questioned whether there would be a TV commercial. For them, that’s just how you do this, right? You do TV. We had a TV commercial without having to ask for it, as part of the package of what they do. Pretty cool. That was a big deal. I think that was the first dedicated TV commercial we ever had.

Ramsay: Earthworm Jim also had a TV series, right?

Perry: Playmates is a toy company, so they really wanted to make toys, too. The problem is that to make toys at that time, you really wanted to have a television show to market the toys. We went to Universal and we were trying to get Universal to make the TV show. That was pretty fun. One day, I had to go to Universal at 9 AM. I had a meeting to pitch Earthworm Jim to the top executives there. I go in this room and there are all these executives. And then the Chairman comes in. Everyone’s cowering before him. He starts arguing with some poor executive in front of me, and I’m thinking, “Oh, my God. This is so intense.”

If you can imagine, I’m just sitting there waiting for this argument to end and then he looks to me and goes “okay, start.” And I’m going to be talking about an earthworm in a cybernetic suit. I’m like “well, there’s this earthworm…” and off I go. I start pitching Earthworm Jim to them and he stops me in the middle of the whole thing. He says “stop” and I’m like “okay.” And he goes “pigs” and I go “what?” He says, “This is confidential. There have been dog movies. There have been cat movies. But there has never been a pig movie. We need to do something with pigs. Write that down.” And people are writing that down. It was so funny because I think that may be the moment when they decided to do Babe.

He decided in that meeting to move forward. Before Universal agreed to make the TV series, there was one more step. The TV guys needed to want toys to be made and the toy guys needed to want the TV series to be made because the TV series would advertise the toys while the toys would advertise the TV series. It’s a circular Catch-22 thing. So, I invited the head of the TV show group and the head of toys to dinner. We all looked each other in the eye and I said, “I’ll make the game if you make the toys and if you make the TV show.” We agreed at dinner to do that. That’s the way to get a deal done. It’s hard. Those are deals where I’ve heard many times that people say “I can’t get this without that” and you get stuck. I think the trick is just to get everyone to dinner and all agree simultaneously. So, then, we had a TV show, we had a toy line, and we had a video game.

The video game was very, very high profile. We had lots and lots of magazine covers. The fact that it was everywhere led us to get lots of other licenses. Marvel actually signed the comic book rights, Warner Kids Network did a deal to air the TV show, and then we licensed everything you could imagine, from underpants to bedspreads to Halloween masks.

If you think about it, for a new startup to have all of this activity going on, I think that was very, very, very new for its time. A small developer licensing out wasn’t something that you really saw happening back in those days. Once we got into the stride, we realized that this was important. With our next game, MDK, I think we ended up getting in around 50 to 60 deals for practically every joystick, pair of 3D glasses, video card, and even the iMac. If you bought an iMac, MDK came preinstalled, so we were making money off each iMac. It was really the Wild West when you realized that there were other ways to sell video games other than just retail.

Ramsay: If you were to start another game company, would you go to another toy company? Or any company friendly to merchandising?

Perry: I probably would. I would go nontraditional. I would try to find an interesting angle or someone that’s interested in games and I’d be their route to games. I’d look for someone who has been thinking about it or watching the space and then do a deal with them. Yep, that’s exactly the way to go.

Ramsay: What was your very first challenge on the business side?

Perry: Business challenge? Good question. I think the biggest business challenge was when I made a gross mistake. Remember, I was programming and then I went to the dark side of management. I realized as a manager that if I could get more games running, then we’d make more money as a company.

The theory was that if you make one game at a time, you’ll make X dollars. But if you make four games at a time, you’ll make four times X dollars, right? That’s fatal mistake number one. What you’re really doing is simultaneously diluting your focus and talent. And you’re expecting to make more money from that?

It doesn’t quite work that way. So, basically, your head explodes because you’re now trying to do four things at once and the team gets all spread apart. It just doesn’t work. We did make Sacrifice, Messiah, RC Stunt Copter, and Wild Nine that way though.

Ramsay: How many people did you have then?

Perry: Oh, wow, that’s a good question. I would imagine probably about 60 or something like that. The place was packed.

Ramsay: Did you have a single team working on four games?

Perry: We had four separate teams making four different products.

Ramsay: Was that a problem?

Perry: I think it comes down to that first thing I said about talent. If you find good talent, the game gets more potent. I just like the idea that if you have the best people who you could recruit, you should have the best working on a single title. I just think that’s the best way to do things. I mean, maybe it works for some people, but I find that splitting your attention is very hard to manage.

Ramsay: How did you discover that?

Perry: There was one key problem. I was at a position in my career where I could make whatever I wanted. That was bad. That means you wake up one morning and you say “I like RC Stunt Copter so I’m going to make a game based on that” and we would just go and do that. That’s not really very cool. On the other hand, whenever we went and made licensed properties, we would make a lot of money back, usually. There was a bit of an ebb and flow. You do something that you find creatively interesting and then you do something to pay bills. You basically say, “Look, I’m sorry, you didn’t make very much from that one, but now I’ll do something big that will make money and you’ll be fine.” And that’s kind of what we did.

Ramsay: But you were very successful at that time. Wasn’t that the goal?

Perry: No, we were actually just trying to make a difference. We were very dedicated to pushing forward technology for video games. We had done that to some extent with pencil drawn 2D art, but now we needed to do that in 3D. We invested very heavily into moving technology forward and I was starting to place bets on where I thought things would go in the future.

And so the tech that you saw coming out of our team was pretty cutting edge. There’s a technology called 3D tessellation. Instead of having a 3D model that you would build and predefine, we would actually generate the model from a description. It’s a bit hard to explain. You know the way that TrueType fonts work? You can scale them to any size. They don’t store the letter “A” in every size. They store a mathematical description of the letter, so that it can be generated at the size of a building and it will be perfect.

We did that with 3D for game models, so you could actually regenerate the character in real time and have polygons move around. We would actually tell the engine which parts of the body mattered and which parts didn’t, so it could steal polygons from the small of your back. But if it stole your nose, that would be bad. Your nose would disappear and it would look weird, right? You had to kind of say, “Nose is very important. Hips are important. Don’t make the hips suddenly disappear.” But the game would actually be generating everything on the fly.

I loved that the technology we were making would scale forward. If new hardware came out, the game would use more polygons automatically. There were just lots of technology ideas that we were investigating. We were enjoying that and getting a lot of attention from Intel, 3D video card companies, and others because they were very interested in showing off very cool technical demonstrations of what their hardware could do.

There was a famous day that I gave a speech with Peter Molyneux at E3. In the same pitch, he demonstrated Black and White and I demonstrated Sacrifice. As a perfect example of what I’m talking about, Intel decided to give me a piece of hardware that I had never seen before. It was a liquid-cooled, secret research PC that they just showed up with and put it on to the desk right before the talk started. That’s a perfect example of where the game would modify itself to use the power of that machine. I was able to show the game looking really cool. Letting people see what the tech was going to look like in the future was pretty cool.

Ramsay: To what extent were you focusing on technology?

Perry: At the time, there was a big focus on technology and it was far too much. I was bringing in people who, quite frankly, didn’t even care about video games. They just cared about 3D graphics. That was a mistake. Our culture started to break. We had people who were just hardcore game guys and then we had guys who thought games were just for kids. “Everything would have been fine if it wasn’t for those meddling kids,” as they say in Scooby-Doo. Coming out the other side, we realized that the game guys were critically important if you want to make fun games.

Ramsay: You were president of Shiny Entertainment from day one. Did you ever feel like you needed to take a step back?

Perry: Not really. I was very engaged with what we were doing. No, I didn’t feel any need to step back at all. When Interplay bought the company, I put some energy toward Interplay so that I could understand their business more but my real focus was on Shiny. It never really changed. Even going to Atari, I was supposed to spend more time with Atari, but just like Interplay, I found myself focused on Shiny.

Ramsay: Tell me about the lead up to the sale.

Perry: After The Matrix came out, the movie was a monster hit so the directors reached out to us again. They asked, “Would you like to talk about The Matrix Reloaded?” Now, at that point, it was the hottest license in the game business so I was very excited about it. They had visited and seen our shop and what we did. We had a good relationship.

Other game companies were trying very hard to get the rights from Warner Bros. Because we were working with the directors, we had a very strong chance of actually getting the rights and we ended up getting them. But Interplay, financially, wasn’t really ready to make big epic games with movie footage, television advertising, and everything else. The best move that Interplay could make was, after the deal was done, to sell the company. That’s what we agreed to do.

Well, the question then was “would someone want to buy us?” It turned out to be very easy to get a buyer. With such a hot property, we were perfectly positioned—we were at the right place at the right time. Atari was very bullish and I was very impressed at how they had a very clear plan. They wanted to get a big property and get behind it. That’s what they did. So, they gave us whatever we needed to make sure that the game got done.

To be honest, we had taken on a little too much with the property. We had to make a PlayStation 2 engine, a Game Cube engine, and a PC engine to make the game even possible. To make engines and games at the same time is actually kind of hard, so the team had really bitten off an awful lot. And then, of course, we were trying to innovate and do new things that had never been seen before. That created a lot of production work, like how to get movie footage made and how to tell the story. This was the first video game where the directors had really written parallel story lines between the movie and the game, and then they shot the movie footage for both. It was a very new idea at the time. To actually deliver that, and to know that you had a date that the movie was going to launch and there was no option to slip, it was something that, as you know, a lot of game companies struggle with. It’s hard to do. It was an intense time—a very intense time.

Ramsay: What was selling the company like for you as the founder?

Perry: Well, it was great. It was financially very nice for me. I was in very, very good financial shape. And I was inspired because The Matrix was important and we had to build a team.

And we even had crazy stuff happen in the last three months of the project. Our landlord leased out the building out from under us with no apologies. He basically said, “I see your team’s growing so much. I assumed that you weren’t going to extend your lease, so I’ve leased it to somebody else.” What? It was a nightmare. We went through a lot of crazy stuff.

Gamers would never know that this kind of nonsense happens in the background. At Atari, I was very interested in a new idea for a game. It was called Plague and I started designing this game. I was very inspired and excited to do it because it had new ideas that you hadn’t seen before. The budget was 19 million dollars and Atari said, “We can’t afford 19 million. Can you do it for less?” I got the budget down to 17 million, but going down two million dollars was really hurting the experience in my mind.

That made me realize that I’m not so sure if I want to stay and do this now. I wasn’t sure if the game would turn out the way I expected. I wanted to do something really shockingly good. At that time, I was talking to the Earthworm Jim team about reforming and the team agreed. I started that whole process and then Atari said, “Look, we can’t afford to start anything new so we can’t do that.” That just made my mind up. I was done, so I was like, “Okay, I’m done now. I’ll see you later. Bye, bye.”

Ramsay: How did you feel about first losing control of your company and then having to leave it behind?

Perry:   Well, I expected that I was going to help them sell the company. I knew that if they were in financial trouble, they’d have an asset called Shiny Entertainment, which can generate money. Shiny shouldn’t have been costing them money. Shiny should have been making them money. I believed very strongly that I could sell the company again, so I proposed that to them. But Atari wasn’t interested; they believed that they could do that themselves. I was more than happy to let them, but I thought I would help facilitate a sale externally and that’s what I did.

I went out and started to talk to investors and people who would buy the company. I ended up pairing them up with the people who actually bought it. It took a different course than I expected. I had some investors reach out who were interested in not buying Shiny but buying Atari. And so we actually went back to Atari with a proposal to buy the whole company and Atari wouldn’t even consider it. It wasn’t an option. That scuttled the whole thing.

As far as Shiny goes, I did make the first introduction to get someone to buy it, but it took about 10 months before Atari actually agreed to sell it to them. There was a long lull and in that lull, I just got on with my life.

Ramsay: You just got on with your life. What do you mean?

Perry: I can’t quite remember the timeline but I got involved in a bunch of different projects that I found interesting. I was consulting on The Simpsons. I was working with Acclaim as a consultant on free-to-play. I was funding my own projects like Game Investors and Game Industry Map. And I was going to the conferences, hosting lunches, and just having a good time.

It started to get very interesting at Acclaim because we were learning about China and Korea. I was flying down there with the CEO, and in the end, Acclaim offered me a job as Chief Creative Officer. I ended up taking that job and eased back on all of this other stuff. I focused more on free-to-play and bringing Asian games to the West.

Facebook was taking off at the time so we were doing a whole bunch of research on Facebook, trying to understand virility and game sharing. We were also discovering issues with digital distribution, the cost of acquiring players, and how important that would be to the future of the business. And so we were investing in new technologies to try to make games easier to play without having to download them.

We were working on interesting server-displacement technology that would allow you to play games on a server but see the output in Flash. If you wanted to edit a level, you would edit the level with web tools, which would actually modify it on our servers and then the game experience, like sprite coordinates and things like that, would be sent to Flash. At the end of the day, while we had games running from the cloud, they still looked like Flash games; they didn’t look magical.

There were a lot of other companies that realized the cost of players was too high, so they started making Flash games, too, like Zynga and many others. There was a lot of movement toward trying to make games more accessible. I was very interested in how to make games incredibly accessible and the number one way to do that was to play the whole damn thing from the cloud.

I went to DICE in 2009 and I gave a speech about this and a whole bunch of other stuff. Some engineers from the Netherlands contacted me and said that they had been working on this technology; they already had it working. They sent me a link and I was able to play World of Warcraft and games like Spore all the way from the Netherlands in my web browser. I went, “Oh my God. This is the Holy Grail! This is what we’ve been searching for.” So, I left Acclaim. I joined them and became a cofounder of Gaikai.

At GDC 2009, we demonstrated the technology to press and investors, and, at the same show, OnLive was launched. From that day forward, it was clear that we weren’t alone in this space. It was us, OnLive, G-Cluster, PlayCast, and whoever else came along. “Cloud gaming” was something that really got going. We put a lot of energy into evangelizing it and trying to get people excited about it. A year later at E3 in 2010, you really saw the momentum and we really started to demonstrate the potential. We signed with Electronic Arts. We were able to put very big games onto the web so that people could start to play from the cloud properly.

I was just at the Cloud Gaming Conference and today there are lots of companies. There’s actually a conference for cloud gaming and there are companies talking about all of the different things you can use this kind of technology for. It’s not something that I think is going to go away. I think it’s going to be a piece of the future of the business.

Our story seems to end with Sony buying us, but what they actually did is start our next chapter. What do you do when you have a company like Sony behind you? What do you do with that?

It’s a very fun brainstorming exercise to think of the potential things you can do when you’re dealing with a company that makes phones, televisions, and consoles. They’ve got so much content and thousands of games. And the games are standardized to a controller. When you put a PC game on a TV, the game still needs a keyboard and a mouse. That’s a problem. But now we had a library of console games that used a joypad controller. What can you do with all that? We were enjoying thinking of the possibilities.

Ramsay: How’d you get involved with Gaikai as a cofounder?

Perry: I can’t remember exactly how that discussion went, but basically, “Why don’t we start a new company together?” It’s very hard to raise money when you’re a company from the Netherlands. It’s much easier when you’re an American company. I was kind of the gateway to getting an American company started with “boots on the ground,” as they say, and I was able to go meet with the various companies here very easily.

Ramsay: Who were the other cofounders? How far along was the company by the time you were involved?

Perry: There were two others: Rui Pereira and Andrew Gault. They had a tech demo. They could demonstrate that the technology was working, but there wasn’t a global network of servers. It wasn’t commercially ready. The technology was hard for me to experience it properly because, if you can imagine, every time I pressed a key, that key press was going all the way to the Netherlands, rendering, and then coming all the way back. There was such an enormous delay. As I was playing a game, I just had to imagine what it would be like if the servers were in Los Angeles, for example.

Ramsay: When you joined Gaikai, what was the first thing that you did?

Perry: The first thing was to try to get datacenter space. We reached out to all of the top-tier datacenter networks, and we convinced a company called Savvis to work with us and give us access to their data centers.

When you’re a startup, you don’t want to spend a lot of money, so Savvis was very happy to work with us on the pricing, etc. We were able to get our servers into five or six datacenters really quickly. This was great because when we’re talking to a company in New York, for example, I could send them a link and they could have a good experience in New York.

Ramsay: You went after the datacenters before you started talking to people about money?

Perry:   We were talking to people about money as well but we started by trying to raise money in Europe. Raising money in Europe turned out to be very difficult. We kept refining our pitch until we finally nailed it. Offers started coming in from American investors. We just found that, in general, American investors seemed more aggressive and willing to invest.

Ramsay: Why is raising money in Europe difficult?

Perry: It was probably our pitch. You know, “Hmm, I should have said this” or “I forgot to mention that” or you listen to the questions you get back and you’re like “I thought that was clear?” Now you’ve got to fix your pitch. After awhile, you can tell that your questions are answered and they understand what you’re saying. At some point, you start to feel like somebody might actually say yes. It’s actually good to get out there and practice. We got our first investment in December 2009.

Ramsay: I read that you joined Gaikai in 2008.

Perry: Technically, in 2008, I was just thinking about the concept while the engineers were working on it in the Netherlands. I officially joined after my DICE speech which was January 2009.

Ramsay: And by the end of the year, Gaikai was funded. You know, you’re a game developer and you joined a technology company.

Perry: I know, it’s funny, isn’t it? It’s funny but that’s really what this is all about. The game industry is becoming more technical. In the old days, you made games, you stuck them in a cartridge, and you just sold the cartridge and you’d have no idea whether people liked it or whether they were getting frustrated. We just didn’t know.

But the more that servers became involved, the more we were able to collect data and say, “Wow, people are getting stuck on level 7 in room 4.” We can now fix that and issue an update. This is where the world’s going! It’s becoming more and more connected. Developers are directly connecting with gamers. We’ll end up making better games because of it.

It’s inevitable. We’ll have more and more discussions about datacenters, the cloud, metrics, and studying the data and trying to learn about what motivates gamers, what they like, and what they don’t like. And we’ll be able to use that information to try to make the best software possible. It’s a different world. The world is evolving so quickly. It’s amazing.

Ramsay: Making the switch from working from one perspective to working from another can be difficult. How easily did you transition from working in development and publishing to working at Gaikai?

Perry: It’s different for me because I’m into learning about things. That’s what I do. I’m not that interested in just being into one thing. I used to be an engineer but I also used to do design. I used to do audio. I used to do art. I got into licensing. I got into publishing executive positions. I just keep learning as I went and then, suddenly, I’m building servers on my dining room table. I found that fascinating: getting those servers up and running, data centers, and learning about all of this stuff.

Now, I’m at Sony and I’m learning how they operate at that size of a company, learning how they make consoles and looking forward to the future and all that. It’s very fascinating for me. While I’m in the tech space, now I’m squarely back in the game business but in yet again a new position. That’s very interesting. As long as I keep learning, I’m interested.

Ramsay: How many employees did Gaikai have initially?

Perry: Initially, in the U.S., there was just me, and then the guys from Europe came over. We added a third guy, so we ended up with three from Europe. I started to build a team here: hiring more engineers, more executives, and everybody else. We basically built the team over time starting from 2010. But, you know, I was literally sitting in an empty office waiting for the other guys to arrive from Europe and we quickly scaled up from there. In a short amount of time, we were up to around 30 people.

Ramsay: Was your approach to recruiting similar to your approach at Shiny, at least in terms of how you identified your needs?

Perry: The DNA of Gaikai is all networking, video compression, video decompression, and lots of technology people. We have to lean very heavily toward very technical engineers. It’s not a game company, so we don’t have animators and traditional artists. It’s not the same sort of structure as a normal company, so we don’t have motion capture and a lot of physics programmers and all that. We’re very engineering-driven, specifically by engineers who can innovate.

Ramsay: What did you learn about building a team for a technology company that could double as lessons for game development?

Perry: I think the big change when you’re building a company these days, whether you’re making games or tech, usually you’re trying to make the highest quality software in the most efficient amount of time using an efficient amount of people. How the company is managed will define who lives and dies going forward because the cost of games just keeps going up. There are great books out there now to help people think about ways to get to the point quickly. Instead of building a massive sprawling game and then finding out that no one wants to play it, you can quickly get data to prove that people like your game before you spend a whole bunch of money.

Someone once said at a conference, “Just make the landing page for your game and put a ‘play now’ button on it. If you can’t get anyone to click that button, ‘Thank God that you didn’t make that game.’” If you click the button, the ­website will say “sorry, the game’s not available yet,” but all you’re doing is tracking to see if you can get anyone to click and whether anyone cares. It was a funny idea but it actually makes sense.

Can you imagine if you built a big game, stuck it there, and no one wanted to play it? Trying to work out what you’ve got as quickly as possible is a concept that’s consistent across technology and games. Just get to the point. What is the core of the game? Why do people care? How long do they play it for? What level of fun are they having? Find that core and build around it. What a lot of people do instead is they spec it all out and then they build something without really knowing for certain that the core is awesome. The data can help you figure that out really quickly and maybe open up your mind to a whole new idea for the game. You might find that you designed a game to do one thing but something else is more fun.

Ramsay: How quickly did the business model for Gaikai come into focus?

Perry: We were actually forced to think about. We did an awful lot of analysis of all the possible business models that we thought gamers would like. But if I sell you a game in the cloud, I have to be certain that you will have servers available to you wherever you go 24/7.

So, we decided to focus on demos. We would invite you to play the demo: “Hey, would you like to check out this new game that just shipped?” And that meant we could balance the load on our servers. We could keep our servers running at a high capacity while not having to buy lots of them. That was the theory. Instead of building out the service and then sitting there, praying and hoping people will come, we go the other way. We’d build out the service, invite people to play, and the more sites we get onto, the more people we can invite to play. That became the strategy. How many sites can we get onto? How many digital TVs? Everywhere we were, we’d grow our audience and we’d build our network like that.

Ramsay: Why did Gaikai focus on selling to enterprises? OnLive was going directly after consumers.

Perry: We were trying to avoid competing against anybody from the start. When a publisher offered to invest in us, we said no. When a retailer offered us money, we said no. We were trying very hard to be Switzerland. We weren’t taking sides with anybody. We wanted everyone to see Gaikai as valuable to them and none of them to see us a competitor. To be clear, if I start to sell games directly to gamers, I become a retailer and I’m in competition with other retailers. If I start building micro-consoles, I become a direct competitor to console companies. I didn’t want to do that.

Ramsay: A publisher offered to invest in you? How were publishers reacting to Gaikai when you talked to them?

Perry: Once we started demonstrating, the initial reaction was: “We’ll give this a try. Let’s see what happens.” After that, we improved the calls to the service, so the quality of the experience just got better and better, so they put us on more and more pages.

And then we found that each time we got a game in a certain genre, other people in that genre would reach out to us. So, when we put a MMO up, we’d get lots of companies with MMOs contacting us. We’d put out a shooter and then the other shooter companies would call.

Nobody wanted to be the company that wasn’t represented. If you think about it, you don’t want to go to a retailer’s website where you can’t play games. That was where we found ourselves: if one company was doing it, then their competitors wanted to do it, too. We were able to help that along, so generally, the service marketed itself to some extent.

Ramsay: I remember sitting in the Gaikai booth at the E3 Expo, watching you show the technology to Jay Wilbur at Epic Games. He seemed to be quite impressed. Was his reaction typical?

Perry: Well, the thing is that a lot of engineers were on record saying that cloud gaming was impossible. That was really good because it meant that expectations were very low. When they came into the room and they saw something that wasn’t what they expected, they were easily quite surprised. We were seeing tweets from people saying, “What is this? Voodoo? What is going on here? How is this possible?”

It’s just amazing how a lot of the things that you experience on the Internet aren’t optimized for speed. We have this general feeling of malaise on the Internet. It’s like the Internet’s quick, but it’s not that quick, and yet it is actually really quick. There’s just a lot of stuff that isn’t optimized for speed.

When you take the time to optimize for speed, it’s quite remarkable what it’s capable of. We used to get people in all the time who’d say, “Look, this is impossible. It will never work. I can’t even play a YouTube video on this computer. It stutters.” And then we would run our demo and it would run really well and they would be like, “Okay, how can you do that and Google can’t”? The answer would be “because there’s a server in your city and we’re delivering a direct connection to you fully optimized. They’re serving millions of people from centralized locations and you’re not the highest priority to them; and, in that situation, your experience doesn’t match the real capabilities of the Internet.”

Ramsay: There was a time in 2012 when I felt like every week Gaikai was announcing a new deal with Walmart, Samsung, or some other major corporation. Yet, while big contracts capture headlines, I wonder if you were also working with smaller companies?

Perry: Yes, we were. We had an internal goal to get to 100 million monthly users who we could get games in front of and we were trying to get there as quickly as we could, so we were signing a lot of small companies and websites. We would put games on every site that we signed and then we would add that traffic to our reach list. We had a whole team of people going out and just signing a lot of gaming sites and publisher sites, trying to get as many eyeballs as we possibly could. Once you get past 100 million, you start to get to the point where you can really move the needle for people. That was a lot of work.

Ramsay: What do you mean by “move the needle for people”?

Perry: What I mean by that is you could give us your game and then we could press a button and have your game appear that day in front of the traffic to tons and tons of different sites. Your game would then have immediate reach across all of those sites. We could even do big sites like YouTube and Facebook. Say you had your own Facebook Page. We could put your actual products right onto your Page. That was pretty cool.

Ramsay: When you joined Gaikai, you were very excited about your prospects and then everything just ballooned upward from there. Were you ever worried about anything?

Perry: Yeah, the worrying thing was that there was a lot of competition. There were a lot of people competing for the same clients, customers, and gamers. And part of the worry was from trying to keep an eye on what everyone else was up to and making sure that we were aware of what was going on. There was a certain level of paranoia. I remember Bill Gates talked about that in a book once. You have to be kind of paranoid about what else is going on. I think you have to be constantly watching and paying attention. That’s what we were doing because we were trying to get the best games as quickly as possible.

Ramsay: What led to the acquisition of Gaikai by Sony Computer Entertainment?

Perry: We had signed Samsung and LG, so we were very excited about our position there. We had signed the number one and number two television companies in the world and they had committed to using our cloud as their gaming cloud. We were pretty excited about the potential. Then it seemed like the perfect time for someone to come in and buy us because, if they didn’t, we would have ended up running those services ourselves.

Ramsay: Did you put the word out that you were looking to sell?

Perry: We never did put the word out that we were going to sell. That was kind of funny. It was a sort of a mishmash of random events that caused that to happen. We never actually said to someone, “Oh, we want to go sell the company.” That entire problem started when someone asked me, “What will you be doing in five years?” I said, “I think someone will have bought the company by then.” And that caused a whole lot of chaos, right, because “oh, Gaikai’s for sale.” No, that’s not what I said, but you know how that goes sometimes.

Ramsay: Reports suggested that you put out a figure of $500M.

Perry: I didn’t put a figure out there. Someone picked that out of the air.

Ramsay: That’s interesting. I remember thinking that initial price was part of your strategy to drive up bids.

Perry: Nope, not at all. It’s times like that where you’re trying to lay low and get your deal done. You don’t want a whole bunch of press. We were reading that press going, “Oh my God.” You never know what the press the next day will say.

Ramsay: Did that unwanted press lead Sony to make an offer?

Perry: We had already been talking to Sony at that point.

Ramsay: Was Sony your only suitor?

Perry: I think there were a lot of companies that would like cloud gaming, so there were plenty of people who we had talked to over time who were interested in the company. But we just hadn’t met that perfect partner yet, where they had everything we were looking for.

Ramsay: Sometimes founders are very attached to their companies. When you sold Shiny, you just wanted to get out. What about Gaikai?

Perry: This deal is a major level up for us because it allows us to think much bigger now. We’re thinking much bigger than we were before.

Ramsay: Now that you’re part of Sony, how has your role changed?

Perry: It hasn’t changed at all. I’m still the CEO at Gaikai. It just has a new tagline. It’s a Sony Computer Entertainment company.

Ramsay: Gaikai isn’t on the path to being absorbed?

Perry: No. They have a history of doing this. Naughty Dog is a great example.

Ramsay: When you look back on your journey from Ireland to Gaikai, what are your thoughts?

Perry: Let’s call this Year 30 in the business. I think the trick that I’ve found is the whole industry stays incredibly fun as long as you keep moving with it. It’s very easy to get off the train. The train is moving very fast but if you stay on it, it stays very interesting because the industry evolves every single year so dramatically. It’s quite stunning and I think it’s actually accelerating with mobile, VR, the cloud, and everything else.

So, I’m very much trying to stay at the innovative end of the game industry and not just stay stuck in “I used to make games and then I left and I went to do something else.” I’m staying in and I’m very much enjoying trying to predict what’s next, which is very hard to do. It’s very hard to guess what’s next. There are so many opportunities but it’s fun.

I’m the guy who was on stage arguing with the retailers to prepare distribution for the future and it’s that kind of stuff that I get very passionate about. I don’t have the same restrictions, or at least I didn’t, on me that normal employees have, so I was able to speak my mind. I very much enjoyed evangelizing things, concepts, and companies while, at the same time, trying to think forward. One of the best things that happens is when you’re asked to give speeches about the future of the business; that forces you to sit down and think. Where is the industry going? That helps make your decisions. It’s a healthy cycle to get into. I highly recommend it.