Scalify's recent $2 million windfall had its genesis almost 10 years ago, and, along the way, the concept has touched key elements of Australia's start-up ecosystem.
The seeds for the deal were sown almost a decade ago, when CEO Steve Telburn worked with voice over internet protocol (VoIP) start-up Zellor Software, which secured funding from Starfish Ventures.
Zellor didn't pan out as expected — the idea was ahead of its time, Telburn said — but it led him to a fruitful consulting career, and, more importantly, to reconnect with an old friend and colleague, Santosh Kulkarni.
Kulkarni was leading a National ICT Australia (NICTA) research project to commercialise peer-to-peer technology, and in 2010 he teamed up with Telburn to co-found Scalify, after they identified an opportunity in the burgeoning gaming market.
Last year, the pair sought funding to spin out the four-year project from NICTA, a deal that would see the research organisation take an equity stake in Scalify, and Telburn's first call was to his old friends at Starfish. This led to the $2 million to fund the company's growth.
The Scalify technology ("Badumna") is touted as a way for massively multiplayer online (MMO) game publishers to remove capacity constraints by using the end-user network (game players) to perform key computing and processing functions, instead of the traditional client-server model.
Publisher server costs can be reduced by up to three quarters, Telburn said, but the real potential is changing the way that games are designed and played.
The increasingly popular social-gaming segment isn't actually social, because individuals play in isolation or one on one. Scalify's technology, however, can be used to develop games where thousands of people around the world can interact in the virtual universe, something that has been difficult until now.
"If you're trying to support thousands of people concurrently in a virtual environment, and every time somebody moves or changes the environment, such as opens a door or turns a light switch on, that has to go up to servers and back to anyone that needs to see that information or cares about it, it's a pretty horrific load. And it needs to happen in real time.
"What we can do is send that directly [peer to peer], which means the performance improves and means [the games] can scale a lot more quickly. It also means you can design new types of games; you don't need to design your games, mindful of constraints."
The company is targeting [MMO] publishers, in the hopes of reducing their costs and overcoming design limitations, such as the practice of "sharding", where virtual worlds are split, based on server capacity in a particular geography.
Telburn expects that at least one deal will be signed this year, using a subscription model, which charges publishers based on the number of game players.
The company raised $2 million in funding from Starfish. It's a NICTA-developed technology, and has a targeted business model.
The company's fortunes are ultimately tied to the ability of the game publishers to extract the most from the technology. There is some customer education required.
The reach of Facebook and the iPhone has created the potential for a new class of social games that can be played on a massive scale.
Scalify is in a race to develop the first truly social, massive MMO game, but it could be beaten to the punch by another company with a similar technology.
There is no doubt that Scalify will be a commercial success via the anticipated deals with big game publishers.
However, the real question is whether it can be the catalyst for a new type of gaming experience, the truly massive, social game. In order for Scalify to scale, the technology needs to be used to build the next Angry Birds or Fruit Ninja. This will allow it to monopolise the all-important game-developer community.
In this regard, it has quite a task ahead of it; and, at this very early stage, it's impossible to believe that it can achieve this.