Scalable, serverless cloud hosting platform for multiplayer games.

Thesis

Deep Moat From a Serverless Model

  1. Unique Product-Market Fit
    1. At the moment, Hathora is the only true serverless computing offering built specifically for deploying games. It brings value by not only providing backend infrastructure, but also completely managing the deployment of that infrastructure, presenting a unique fit with indie and middle market studios. These studios tend to be more game-centric, focusing on areas such as building logic, refining design, improving user experience, etc., while having lower and more costly technical capabilities. As such, there is a strong pain for complete infrastructure outsourcing, which suit Hathora’s primary offerings.
  2. Sticky User Base
    1. Hathora is an end-to-end service that spans across the multiplayer stack, from game framework to infrastructure management and deployment. Customers, especially those with limited technical capabilities, will be highly dependent on the full stack infrastructure setup, making Hathora an extremely sticky platform with high switching costs.
    2. Competing services, such as Unity Multiplay, offer broad suites of products, but these products tend to be relatively fragmented. Studios can build on the Unity engine, for example, while hosting their servers on a third party service.

Business Model Scalability

  1. Highly scalable business model
    1. As a Hathora based game continues to grow in scale, the usage of Hathora’s services will continue to grow. This leads to revenue growth without incurring additional customer acquisition costs. Specifically, cohort revenue would grow over time and lead to expanding margins on a per customer basis.
    2. Hathora’s revenue scales in both the success of the games they support as well as the amount of games that pay for its service.
    3. Hathora outsources their cloud capabilities. Any pricing changes that hardware and public cloud providers are directly passed to the customer through the usage based pricing model.
  2. Hathora grows alongside studios
    1. Provided a successful game built using Hathora, a studio has strong reason to use Hathora for their next game. A studio that previously used Hathora is likely to be missing a team of 3-5 engineers that have built usable multiplayer infrastructure. Hathora on the other hand can already handle the CCU peaks of modern AAA titles and is constantly aiming to lower latency through extensive benchmarking to reach best in class results.

The Problem

Multiplayer Gaming

The gaming market, the second largest sector in media, was valued at $185B in 2022, and is projected to grow over $210B during the next three years. This growth is driven in part by the 13-17 year old segment, which spends 40% of their time spent on media playing video games. Even in the older demographic between ages 17-24, video games are still played on average of seven hours a week. With these strong demographic trends, almost 52% of the global population plays video games, and 77% of that sum plays multiplayer games. From 2021 to 2022, multiplayer game development continued its pace of significant growth, following up on a strong pandemic-spurred period. Mobile multiplayer development on Unity—which makes up well over 50% of all commercial video game development—grew by 40%, while the number of PC multiplayer titles in development grew by 150%. Yet, development continues to be a significant pain for studios across the spectrum. Development timelines no longer reach even close to prior half-decade standards, as over 90% of games still take more than six months to develop and launch, while roughly 60% take over a year to develop a launch.

Unity 2023 Gaming Report

Unity 2023 Gaming Report

This timeline can be extended even further for multiplayer games, given the complex framework and unique infrastructure requirements—setting up infrastructure, alone, can take 20+ weeks. Especially for indie and middle market studios, where this setup process is both slow and costly, there is a strong need for solutions across the entire backend stack, spanning from game framework to server deployment.

Building Multiplayer Infrastructure

Client server model based games accept inputs from a player, communicate the inputs to a locally hosted backend server, then updates the game state and sends it back to the player. The developer is required to keep their server permanently online because any IP changes would lead to a failure. To account for this, a developer can move their server to the cloud, where they can pay for a service such as AWS to set up a virtual machine with a permanently active IP. When paying for the service, the developer is required to deeply understand cloud infrastructure in order to calculate how much storage volume, which subnet, and what other needs have to be committed for their virtual machine instance. But even if they have accurately optimized their VM, because they only have manually set up one instance, any updates pushed to the server would also shut down the game. To solve the reproducibility issue, a developer can produce a Dockerfile, a script to that will help create a Docker container that contains all the dependencies and other things needed to run the VM, then automates the build and upload process to AWS using a GitHub action. The developer would then need to use an ECS cluster on AWS to always pick the latest Docker container. Now the developer has made their server scalable and resilient, and can update their game with no issue.

Scaling to multiple regions is the next challenge for a developer. They can opt to set up multiple VM’s globally, but have to consider how to route people to the correct server while optimizing for latency, as opposed to cost. Riot Games spent over year negotiating with telecom providers to properly route player traffic to achieve under 80 ms for all players in North America. For the average developer, they might route traffic to edge servers which then further proxy to find the correct server to host a room.

This is only part of the complex infrastructure challenges developers face when setting up multiplayer infrastructure. Some further challenges include load scaling, expected and unexpected server failure, server analytics, as well as storing state beyond regions.

Team

**Siddharth Dhulipalla | Co-Founder & CEO**

Experience