OnLive, “The Future of Video Gaming” as Long as You Can Buy it

OnLive, the streaming internet gaming service has recently come under flack from none other than the console makers. Representatives from the big three have spoken on a range of issues, but most interestingly the future of online and ‘œcloud’ services in the videogame industry.

Microsoft’s Neil Thompson, Sony’s Ray Maguire and Nintendo’s David Yarnton have sat down and had a chat with MCV, who all present basically the same idea, but with slightly differently phrased corporate speak. PlayStation UK boss Ray Maguire has said that despite the impressive (if yet unseen) technologies of services like OnLive, they won’t be able to compete with dedicated hardware such as the PS3. He said that:

When it comes to delivering an entertainment experience on par with the quality consumers have come to expect… dedicated games consoles remain the only systems powerful enough to do this.

Microsoft’s Thompson spoke much more positively saying that ‘œthe cloud will play a central role in the games industry of the future’, but very much moved the conversation on to saying how awesome Xbox Live is, while highlighting the possibility of multiple devices to game on. Nintendo’s answer was very much in line with Sony’s, suggesting that while digitally delivered software was important, ‘œphysical hardware’ was still a major part of their business model.

All three companies have very different tones, however there remains a definite sense of wariness. The threat of OnLive is a big one: buying a cheap box and then streaming your games over the internet is an attractive proposition, removing the large barrier-for-entry that a £200 console is.

There is also the factor of videogame publishers; whose side are they on? If ‘œJoe Gamer’ only needs to spend £50 on a set-top box to play Modern Warfare 2, surely that means more sales for Activision? Publishers have shown great interest in OnLive already, with Steve Perlman, founder of the service saying that ‘œnine of the largest game publishers in world signed up [with us]‘ including EA, Take-Two and Ubisoft.

Sony, Microsoft and Nintendo’s business models are based on hardware sales and the big three have a symbiotic relationship with publishers: the console companies gain when the software companies (like EA and Activision) sell lots of games. At the same time, EA can’t sell copies of Fifa or Madden without a large console install base. But if that reliance on expensive console sales is removed, there is scope for a huge growth in games sales.

Of course, as good as OnLive could be, we’ve not actually seen anything concrete. OnLive touts itself as ‘œthe Future of Videogaming’ with a now out-of-date release schedule of ‘œWinter 2009′. The technology is ‘œstate-of-the-art’, but only if you can actually buy it. There’s also the issue of internet speeds, especially in Britain, which Sony’s Maguire brings up:

It’s worth considering that the Digital Britain Report only suggests all UK households have access to a 2Mbps minimum broadband line by 2012.

However, OnLive claims it only needs 1.5Mbps download speeds for SD play and 5Mbps for HD, with the system ‘œdesigned [to] deal with [the problematic] characteristics [of the internet]‘. Maguire also comments on Sony’s commitment to its Blu-ray platform, saying that ‘œit’s unrealistic to expect the vast majority of consumers to access and store the 25 or 50 gigabytes of data that make up a Blu-ray release’.

While Microsoft sided with HD-DVD in 2008′s format war, they didn’t commit as aggressively as Sony did with Blu-ray. While this may have contributed to HD-DVD’s failure, it also didn’t restrict Microsoft, tying them down to a format that could of (and eventually did) flop.

Microsoft has also been much more forward-thinking than Sony in terms of online adoption. If broadband speeds, (which aren’t so much of an issue in the US) increase, why would you buy a disc version of a game if you can download it instantly? The same has happened to the music industry and is well underway with movies, so why couldn’t it eventually happen to videogames?

OnLive is cool, or at least the idea is, but at the moment we’ve not seen anything solid. It’s all very nice having a cool idea, even better having a product, but launching it is something different. Back in 2002 a small company called Infinium Labs chirped up and announced that it would be releasing a new console (ironically) named The Phantom.

The console promised a range of futuristic technologies including the now famous Lapboard controller. The console promised a direct-download games platform, enabling gamers to simply download titles on-demand, something we’ve only just seen in the last couple years. The console eventually faded into obscurity, with its creators losing around $60 million in development costs. What the The Phantom shows us is that despite money, a great idea and even a product, actually getting a device onto the shelves is the real challenge.

OnLive runs a risk of becoming this decade’s Phantom, mainly because it’s going against such grounded interests in Sony, Microsoft and Nintendo, who are possibly beginning to feel threatened by the vapourware that is OnLive. OnLive (as well as others such as Gaikai) has the possibility to reshape the videogame industry, but it is only a possibility. We’ll see what happens in the next few months, but the acknowledgement of OnLive by the big three means that the plucky start-up is at least making some noise, if not any consoles or even money.