Cloud has greatly transformed the entertainment industry, specifically the gaming entertainment segment. In fact, cloud-streaming for gaming has become one of the much-talked and happening topics in the gaming industry. Cloud is actually changing the gaming business, and carrying it to a better place.

With an explosion of social games, especially on mobile, the cloud is playing a significant role. One such gaming company, California-based Gaikai has been hitting the news a lot recently as they compete with other outfits such as OnLive. Gaikai has recently collaborated with Facebook to introduce cloud gaming to users who actively log onto the leading social network. This will enable the gamers to play PC games instantly in-browser without any need of high-end PCs.

The hot news about Gaikai is that it is actively looking for a buyer, has hired bankers, and is expecting in excess of $500 million. The California based company has already raised $45 million in VC funding, from firms like Benchmark Capital, Rustic Canyon Partners, Intel Capital, New Enterprise Associates, and Qualcomm Ventures. Just last year, it raised $40 million from HTC as a part of its VC funding round. What’s interesting here is the potential buyer of Gaikai, which might be some gaming company like Sony, Nintendo or Microsoft, or may be some broadband company, or just some other big game publisher.

Lately, we have been hearing about some other developments from Gaikai, including a deal with gaming video network Machinima. As a part of this deal, both of them will seek to bring popular gaming-related entertainment to Gaikai’s open platform. This deal is clearly expanding the cloud streaming capabilities of Gaikai, and hence the entire cloud gaming industry. The company also partnered with Nvidia for the production of cloud-gaming video cards, taking another step ahead in its efforts.

On the flip side, Gaikai’s biggest competitor, OnLive is also working hard to beat the competition by making major updates, showcasing new games and features, and their efforts to dominate SmartTVs. OnLive is a pioneer in on-demand cloud gaming and offers cool stuff related to cloud gaming. The cloud gaming platform will be adding a slew of new video games this year such as the SEGA® Official Video Game of the Olympic Games London 2012, which allows gamers to create their own moments of sporting history while competing in more than 30 Olympic events.

It seems that OnLive and Gaikai are going head-to-head in competition by partnering with Google TV and Samsung TV respectively. The Gaikai-Samsung partnership is dubbed “Samsung Cloud Gaming,” and will bring Gaikai’s game lineup to Samsung televisions this summer.

These developments clearly signify the shifting of paradigm within the gaming industry from conventional thinking to cloud delivery, and finally to the cloud streaming of games. Online and mobile gaming, with the help of cloud, is poised to be a strong anchor, unlocking fresh revenue-generating opportunities with mainstream audiences as the targets. This is quite evident from the mobile gaming’s valuation of over $70.1 billion within the next five years, the credit for which goes to the cloud.

Electronics and search giants like Samsung and Google are showing their keen interest to adopt this transition, and have partnered with Gaikai and OnLive respectively for their SmartTVs. Rumors are there that the gaming giant Sony might snap up a major gaming streaming service, which led to frantic activity on Twitter and videogame news sites a few days back. Industry experts speculate that cloud streaming games may replace gaming consoles, as it is a better option for gamers. In fact, streaming might become the best bet for gaming giants suffering from losses. So, the crux is that the cloud streaming is becoming the next big thing in the gaming industry. What’s your take?