OnLive May Soon Go Offline

As technology advances, the concept of ownership has been evolving with it. The most drastic change occurred in how we consume media, which is more experiential than physical. Vinyl records, cassettes, CDs, DVDs and other forms of physical media have either become extinct or are on their way out. Today, people are more inclined to have an MP3 or MVI file on their computer than a bunch of disks lying on their desk or cluttering shelves. As cloud computing and streaming become ever more prevalent, what it means to own a piece of music, a film or videogame becomes ever vaguer. Services like Pandora and Grooveshark allow for music to be streamed for free, Netflix allows for rentals of movies with a monthly subscription, but one service, OnLive, is (or was) an interesting outlier.

The initial concept for OnLive, proposed at Game Developers Conference 2009 and backed by companies like Warner Brothers, British Telecom and AT&T, was applying cloud computing to hardware-consuming video games. Today’s PC games require users to upgrade their computers with expensive graphics cards and processors. The alternative, buying a PS3 or Xbox for console gaming, is often as expensive a route. OnLive runs videogames on servers and delivers the content by Internet, with no software downloads required. OnLive also offers an “OnLive Desktop” to remotely host Windows Server 2008. A computer or other device need only have the capability to stream video over a good Internet connection. Inputs from the keyboard or controller on the user’s end are sent to one of OnLive’s five data centers, where the remotely running game responds accordingly before video is shot back to the user within 1,000 miles of a data center. At first, OnLive ran on PCs and Macs but the company demoed their technology on handheld Apple and Android devices as well as certain Vizio televisions. OnLive also offers a set top box with a controller that users can hook up to TVs that lack Internet connectivity. The versatility that the service provides is amazing, as are the titles it features like the hits “Assassin’s Creed” and “Bioshock,” but it isn’t without problems. Some games that require twitch reaction simply don’t work with OnLive, which is better for lower frame rate games because of the unreliability of Internet connections. In fact, when it was released, OnLive was highly criticized by Eurogamer’s Digital Foundry, which accused the company of faking demos. In addition, the business model that OnLive used was initially poor and to some extent remains faulty. Unlike Netflix and the other streaming services aforementioned, users have to pay for each game and until October 2010, several months after launch, OnLive charged a subscription fee of $14.95 on top of that.

After this unpopular surcharge was dropped, OnLive’s CEO Steve Perlman also announced that the service would allow users to access 30-minute demos for free as well as rent games. The company fiddled with flat-rate packages but large video game companies like EA with Origin and Valve with Steam found that avoiding the cloud route altogether was more profitable. OnLive’s cloud-based competitor Gaikai (which was purchased by Sony for $380 million) only delivers demos within browsers, but never attempted to sell games for streaming. On Friday of last week, OnLive laid off a significant portion (rumored to be 50% or more) of its staff and was sold for an undisclosed amount to a company that as of yet remains unknown. OnLive said that it will be reorganized, that some staff will be rehired and that the service will continue to exist. But this drastic reorganization may cause users to lose confidence in the company and more significantly, in cloud computing in general. If OnLive shuts down its servers, customers will essentially be robbed of what they “own,” a license to play a game that is sold for the same price as the game itself.

OnLive was supposedly immortal in that its backers were expected to throw money at it regardless of its losses. But now, OnLive might die and prolong the transition away from physical media and expensive hardware for consumers. Apparently, people are more content with having a digital copy of a videogame on their computers and consoles than one that is being run on a computer elsewhere, despite the fact that both are intangible.


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