With the advent of higher bandwidth and fat pipe Internet connections to residences we’ve been seeing the rise of streaming for everything. It can affect more than just TV shows and movies, but also video games. Gaming-on-demand is the Holy Grail for impulse buys of interactive media from the Internet. The usual video game purchase goes from mail or brick-and-mortar where a person has to wait for the arrival of or buy a DVD themselves by hand and then they’re good to go—using the Internet, it may reduce that time to a few hours and some storage space, but it’s still a waiting game.

Looking at how movies are streamed to viewers, cloud-based video game companies like OnLive and Gaikai run the game on their cloud servers and then stream the video to the console. While this gives the user instant access to the title (no wait for that multi-hour download) it does so at some degradation to immersion due to lower resolution and possibly some controller lag.

Happy Cloud wants to change this waiting game into a get up and go by leveraging the cloud to provide the best of both worlds of download and streaming. GigaOM reports on how the startup intends to provide their solution,

Happy Cloud, which is launching Monday in a semi-private beta, is the brainchild of Jacob Guedalia and his brother David Guedalia, who founded iSkoot, the mobile communication app start-up which Qualcomm purchased last year. The Happy Cloud service works by tapping the cloud to get AAA games running within minutes while downloads are completed in the background. Video services have done this for a while, but it’s been harder to do this for video games because they’re not linear, but are interactive. Happy Cloud achieves this by using a virtualized file system to pre-install a game in the cloud, eliminating the need for a user to go through an installation process. Consumers just load up Happy Cloud on their PC one time and then when they buy a game, the service begins sending the data in the order it’s needed so players can get started right away instead of waiting for the download to be completed.

Given the possibility of being able to get up and running on a typical 8.5GB game (which would take several hours to almost a day to download) Happy Cloud says that they could bring that to a user within 4.3 minutes on a 10 megabit per second connection.

And with the announcement that Akamai intends to develop a very similar service (just without the progressive downloads) Happy Cloud could deliver significant competition.

Since most of the bulk of modern video games exists in the graphics and not the gaming engine’s core, cloud-services such as Happy Cloud might be able to pull this off pretty well. They could provide the game engine as quickly as possible and then prepare a set of downgraded graphics and sound media for the first things that the user will see from the game. This means, as long as the user spends long enough getting through the first parts of the game, the rest of the game world (or at least the next level) could be downloading in the background as they play.

By the time the player moves onto the next map, Happy Cloud could have downloaded the files necessary to provide the game play.

The result is a game play experience that doesn’t have to wait hours for the entire game to download and an experience that doesn’t differ at all from having the game entirely stored locally (as it is stored locally, but just the components currently necessary as the rest flow through the pipe.) It would also permit users to play the game offline—unlike a fully cloud-based on-demand game—of course, only after they’ve downloaded a sufficient portion. If the player stopped the download and went offline they’d run into a situation where they’d run out of content.

This sort of progressive download with enhancing experience is something that companies like Blizzard have implemented for online games like World of Warcraft. The game can be downloaded over a broad enough Internet connection and becomes playable after the core engine and enough media have been downloaded (just at a degraded level) and can be played while the rest of the bulk is downloaded.

It could also open up an entire new subscription concept for PC and console video games that use episodic content. Instead of putting players through a multi-hour experience downloading the next episode, players could get into the action immediately as soon as it comes out and play through the content as it downloads in the background. Services such as Microsoft Xbox Live and Nintendo, who have been pushing the personal cloud, would be in line to take good advantage of this.

So, cheers to Happy Cloud, a startup bringing video gaming to the next level.