GDC: OnLive promises near instant online access to high-end console and PC games

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OnLive founder Steve Perlman (left) and Chief Operating Officer Mike McGarvey. Credit: Alex Pham / Los Angeles Times

Music and movies have both started down the path to download. But video games have remained on the sidelines, with the lion’s share of sales firmly rooted in old-fashioned retail stores, because many games are enormous files that can take hours to download. That’s now starting to change.


One company, OnLive, is poised to take the wraps off an ambitious seven-year project tonight at the Game Developer Conference in San Francisco. The service promises to let players instantly start playing games on their Internet-connected high-definition televisions or computers with minimal effort. Computer users can access the service within seconds. And players connecting via TV can hook up a ‘MicroConsole’ about the size of a small paperback book.

The service, scheduled to go prime time this winter, has so far signed up nine game publishers, including heavy hitters such as Ubisoft, Electronic Arts, Take-Two Interactive Software and THQ.

Headed by Steve Perlman and Mike McGarvey, the Palo Alto start-up threatens to obliterate the traditional business model because it doesn’t require consumers to pay hundreds of dollars for new consoles every five or so years. Maybe that’s why Sony, Microsoft and Nintendo aren’t participating in the consortium. All three console manufacturers, which get as much as $7 in royalties for every game disc sold for their systems, have been hard at work creating their own online marketplaces. Microsoft has Xbox Live. Sony has PlayStation Network. And Nintendo has the Wii Virtual Console.

“It’s not clear which model will prevail, but I have no doubt that, 10 years from now, this is how we will be playing games,” said Geoff Keighley, executive in charge of game content at MTV Networks. ‘The idea of cloud computing for games is very attractive.’

Publishers theoretically like it because they don’t have to make and distribute discs. They also don’t have to revamp their development and research efforts every five or so years to accommodate new consoles. The model also does an end-run around the sale of used games, which can cut into new-game sales since there are no discs to resell. Consumers are supposed to benefit from not having to fork over hundreds of dollars on new consoles or continuously upgrade their computers and graphics cards to play the latest games.

So what’s not to like? For one thing, the service relies ...

... on a broadband connection with at least 1.5 megabits per second for standard-definition images, or 5 megabits per second for high definition. OnLive estimates that about 71% of U.S. homes have enough bandwidth for standard definition, and 26% have enough for high definition. But effective speeds are often less than advertised.


‘Gamers are very picky about how a game feels and how fast it responds,’ Keighley said. ‘What happens if your kids are chatting online and your wife is shopping on Amazon and uploading photos? Will there be enough bandwidth left for you?’

Perlman, OnLive’s founder and a technology wunderkind who helped develop QuickTime for Apple and WebTV for Microsoft, said his company has been able to cut down the lag to one millisecond from the player’s controller to OnLive’s central server and back to the controller, though he declines to explain just how this is accomplished.

Another challenge for OnLive is persuading consumers to subscribe to the service. McGarvey, who ran Tomb Raider developer Eidos as chief executive for a dozen years until 2005, said the company plans to charge players an undisclosed subscription fee. Players would then have to pay additional fees to rent or buy games. He declined to reveal prices.

If OnLive charges full retail prices for their games, consumers may not bite, said Joseph Olin, president of the Academy of Interactive Arts & Sciences. ‘There’s a great deal of price sensitivity today,’ Olin said. ‘If you want people to go entirely digital, you’ll have to offer something more than just the convenience of getting a game instantly.’

But OnLive may not get to set lower prices. That’s because game publishers are afraid of running afoul of Best Buy, Wal-Mart and other retailers (which provide the majority of the industry’s sales) by offering lower-priced versions of their games elsewhere.

‘This is clearly the future of games,’ Keighley said. ‘But OnLive faces a challenging business model.’


-- Alex Pham