OnLive: Is the world ready for cloud gaming?

by David Mercer

The buzz at the Game Developers Conference (GDC) this week is focused on the new OnLive service to be launched in “winter 2009”. OnLive has been in development for seven years and is headed by Steve Perlman, who previously founded WebTV, which was sold to Microsoft as the foundation for its IPTV platforms.

OnLive’s hallmarks are that it doesn’t require a “console”, or at least in the traditional sense. In fact, there is a small (“pack of cards” size) module (“microconsole”) which plugs into the TV set and connects it to the broadband service. It will also support “almost any” PC or Mac with a simple browser software download – no microconsole required. All games are then delivered from remote servers with very little local storage or processing required. OnLive also owns Mova, which develops facial animation technologies.

OnLive claims to have the “support” of top games publishers, including Electronic Arts, Ubisoft, Take-Two Interactive Software, Warner Bros. Interactive Entertainment, THQ Inc., Epic Games, Eidos, Atari Interactive and Codemasters. The list sounds impressive, but “support” is just a little too vague. It would be surprising if games publishers did not “support” a venture that could cut out the middle men (platform owners, retailers) which take a substantial cut of industry revenues.

No pricing has been confirmed, but the business model will be monthly subscriptions, and the aim is clearly to squeeze as much cost out of the microconsole as possible. Don’t be surprised to see “free” consoles being offered in return for long-term contract commitments.

Online content has already featured in the games industry for some years. In the PC world games content is frequently downloaded, either as standalone applications or in combination with disc-based delivery. And online features strongly in each of the latest generation of TV consoles, including full game downloads. As I reported recently, Strategy Analytics research has found that nearly a third of gamers in the US already claim to buy and download games to a video games console. 21% are doing so on a monthly basis or more frequently.

What is different about OnLive is that it claims little or no “downloading” is required. It claims to have advanced compression technologies that allow a 1MB software player to render the content, which is processed in real time on remote servers. This model clearly depends on the availability of a fast and reliable broadband connection to the TV set. The OnLive microconsole will include USB, HDMI and ethernet. I’m surprised if ethernet is the only connectivity option: it’s an impractical option in many homes, so wireless or powerline connectivity also needs to be available.

The established console vendors, Nintendo, Microsoft and Sony, will express scepticism that OnLive can really compete, and there are certainly doubts about the viability of “cloud gaming” in the real world of dodgy internet service, wireless LANs and the battle over data prioritisation with broadband service providers. Already the gaming community is arguing over latency rates and whether OnLive’s technology can really meet the demands of hard core multi-player virtual worlds, or how close it can come to delivering the 1080p video offered by Sony and Microsoft (answer: not very).

But OnLive’s unveiling has at least put the cat amongst the proverbial pigeons: the 40-year history of video games consoles has been based on the assumption that you need some piece of serious hardware attached to the TV set. It is only a question of time before broadband brings that assumption crashing to the ground, but the end of this year is probably a few years too early for this model to create a significant commercial impact.

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