Revolutionary Video Game Service Threatens Console Industry

Strategic Insights -

OnLive, a Silicon Valley start-up backed by Warner Bros and major games publishers, has unveiled a revolutionary video game service that uses "cloud computing" to deliver high-definition gameplay from remote data centers to gamers with broadband internet connections. This model poses a significant threat to the console-dominated industry, as it eliminates the need for traditional disc-based consoles and allows gamers to access high-quality games on basic PCs and laptops. OnLive's service, launching in the US at the end of the year, is expected to target the hundreds of millions of computer users who will be able to access games using free software that plugs into web browsers.

Key Takeaways:

  • OnLive's cloud computing model allows for high-definition gameplay to be delivered from remote data centers, eliminating the need for traditional disc-based consoles.
  • The service is backed by Warner Bros and major games publishers, who are looking to eliminate piracy, keep more of the revenues they share with traditional retailers, and pay less in royalties for using console makers' platforms.
  • OnLive's technology allows even basic PCs and laptops to play fully featured games using free software that plugs into web browsers.
  • The service plans to launch a subscription model, allowing publishers to sell, rent, and serve demos of their games, as well as permitting gamers to pay by the session.
  • OnLive is also developing a "microconsole" to bring the service to the TV.
  • Analysts Billy Pidgeon and Michael Pachter have expressed concerns about OnLive's potential for significant time lag over a network and the threat of rival companies, such as Microsoft, acquiring the service.

Statistics:

  • OnLive's technology allows access to high-quality games on basic PCs and laptops, targeting the hundreds of millions of computer users.
  • The service is expected to launch in the US at the end of the year.
  • The microconsole is being developed to bring gaming to the TV.
  • OnLive's subscription service will allow publishers to sell, rent, and serve demos of their games, as well as permitting gamers to pay by the session.

Sources:

  • Steve Perlman, OnLive founder and chief executive, interviewed at the Game Developers Conference in San Francisco.
  • Billy Pidgeon, IDC video game analyst, interviewed at the Game Developers Conference in San Francisco.
  • Michael Pachter, analyst at Wedbush Morgan Securities, interviewed at the Game Developers Conference in San Francisco.
  • Press release and technical specifications provided by OnLive.