Melbourne-based gaming start-up Scalify is looking to amplify their efforts to bring peer-to-peer networking to the gaming community after an infusion of $2 million in investment from Starfish Ventures.

According to an article in VentureBeat, the start-up intends to use this investment to increase their stake in a networking technology that they’re selling to networked-gaming studio such as massively multiplayer online games and social games that depend heavily on users interacting with one another,

Badumna allows traffic to communicate via peer-to-peer in a decentralized network. The company argues that this approach enables multiplayer apps that were not possible before. It does so by forming a secondary network of trusted nodes that are used for services such as authentication, third-party arbitration, and others tasks. These tasks are executed in the peer-to-peer network, and so, that network offloads work from the servers.

“As each player joins the game, they automatically contribute additional capacity to the network, making the approach inherently more scalable than any client-server approach,” Steve Telburn, chief executive of Scalify, said in an email. “This is obviously important because publishers do not know if their games will be a success or not, so they need to plan their infrastructure based on the ‘best case’ scenario.”

The Scalify product, Badumna, saw its 2.0 release in 2011 and has recently been upgraded to version 2.1.1. Via this technology, players involved in a peer-to-peer networked video game become an extension of the servers that run the game themselves, providing secondary-services to offload some of the bandwidth and load from the main datacenters.

“Badumna 2.0 includes a distributed validation system that allows developers to design fully secure cheat-resistant applications without having to compromise on the scalability offered by Badumna,” wrote Scalify on Badumna. “Distributed validation system raises the bar on cheating and can offer the security of a client-server architecture on-demand with its ability to dynamically switch between client-server mode and peer-to-peer mode.”

With gigantic MMO games such as World of Warcraft and League of Legends, the datacenters hosting servers for these games must account for hundreds of thousands of users a day (games like WoW have almost 10 million active subscribers total) and as a result they must handle a lot of authentication requests, a lot of playtime, and do so without dropping anyone. By taking a card from BitTorrent and other peer-to-peer networks like Pando, gaming itself can also be distributed across the gamers themselves in order to lighten the load.

Of course, as mentioned in the quote above, technologies like Badumna will need to harden itself against exploits and man-in-the-middle attacks (especially where authentication is concerned.) As we’ve seen with other systems, it’s possible to handle functions on an untrusted system—a client’s computer—by making sure they’re encrypted and hidden from sight and that core functions are not trusted by the server until they’re validated.

Scalify sees what we all see: the gaming sector is growing and it’s growing fast. PC gaming alone is a $18.6 billion dollar market (as of 2011) and that’s only set to increase in 2012; and with it, the increase in proliferation of MMO games will push further into the cloud, into on-demand streaming, and stretch peer-to-peer delivery networks. Free-to-play MMO gaming has seen a 24% rise in profits in the US alone, netting at least $60 per-user every month, and this factor is seeing a need for better delivery options, and cheaper solutions for housing and handling giant data/server warehouses.

Peer-to-peer and the cloud would appear to be the most obvious answers and Scalify have set themselves a straight course right into the heart of that industry.