Why OnLive Will Fail

OnLive

OnLive was announced during a panel at this year’s GDC. The company’s well designed announcement and presentation initially had many journalists and the gaming public excited at the possibilities of cloud gaming. As time has passed and the excitement waned, its time to dive into the idea of "remote gaming" and see what all the fuss is about. For starters, the idea of OnLive is not exactly new, not even to the video game industry. Remember Phantom? Yes, I am referring to the piece of vaporware from Phantom Entertainment (formerly Infinium Labs), makers of the Lapboard. That gaming console, like OnLive, was touted to play all released and upcoming PC games as easy as 1-2-3. It never happened because the company was not able to get the support it required or implement a working distribution system. On top of that, the project was run by a well documented failure of a businessman, Tim Roberts.

Those who are ignorant to history are bound to repeat it. This age old adage is one that OnLive seems to have taken to heart. The company remedied many of the issues that plagued the Phantom early on, including leadership. At the head of their company is Steve Perlman, a man who orchestrated successful ventures such as QuickTime and WebTV. Behind him are other well-known executives such as former members of Eidos and Activision who have partnered up with the engineer behind Netscape and Mozilla. In the fanciful, more down to earth press release, OnLive revealed that it already has the backing of some of the industry’s biggest publishers. Electronic Arts, Take-Two, Ubisoft, and Codermasters are all in support of the proposed delivery method, internet streaming. Rather than create a new distribution system, the company’s box will stream the video output of the games to users in real time. This leaves all of the heavy lifting to the servers on the other side of the internet. Phatom’s major hiccups seem to have already been scared away, so how could this renewed attempt at an internet-based gaming platform fail? The fickle mass market, publisher support, and the internet itself could all spell its doom.

The mass market is a moving target, constantly shifting from day to day and week to week. Nintendo Wii wasn’t heralded as the savior to video games by the mainstream media until well after its release. At the same time, many gamers are still repelled by its heavy line-up of party and casual software. OnLive currently isn’t lining itself up to be a Wii replacement, rather, it will be another offering in the already crowded console market. The black box is more in line with a PC terminal than a console, acting as a drone that enables gamers to connect to a remote server for use. Instead of pounding out spreadsheets and calculating taxes, the machine enables its users to play tons of video games. Unfortunately, the system is propped up as one that plays PC video games instead of exclusive material. As it stands now, PC games are a side note for most publishers, an area they tackle if the marketers believe the cost of a port will be offset by the slim profits. Without exclusive content, OnLive will not be given any killer apps, a crucial selling point for the gaming public.

The makers of OnLive can’t expect the support of gamers unless they have already lined up the content providers. At first glance, it seems that they have already accomplished what even the Dreamcast failed at. As it stands, OnLive has eight big name publishing houses on board, lacking Activision-Blizzard and Stardock Entertainment from their list of top PC publishers. Despite the impressive-sounding roster, nothing has been promised to the service other than year-old ports and titles that will be six months to a year old when the system launches this Winter. With porting to the OnLive service taking a few hours of time, it is an obvious choice for many publishers to sign up. By supporting the system up front, they are getting their foot in the door in case it ’goes Wii,’ but risking almost nothing in terms of money. After all, in today’s economy any additional revenue stream is something that all companies would have to seriously consider. At the same time, not a single company has given OnLive more than a laissez-faire approach. Not even indie producer 2D Boy or publishing giant EA hinted at an exclusive title. In short, the publishers have signed up with good intentions, provided the service with some quotable titles – for now, not six months from now – but have given OnLive no forward-looking commitment. Scary.

OnLive’s biggest issue happens to be its biggest asset and entirely out of the Palo Alto, CA start-up’s control: the internet. As overly simplified by Ted Stevens, the internet is not a big truck that we can dump things on. While out of touch, the man was not incorrect; even the internet has its limits. OnLive promises high-definition gaming to those with internet connections and the hardware to support it. Today’s internet is simply not fast enough to handle the kind of bandwidth required for high definition gaming via a streaming service, despite the claims of OnLive. The company’s press release states that "broadband connections of 1.5Mbit/s (71% of US homes have 2 Mbit/s or greater) dials the image quality down to Wii levels while 4-5 Mbit/s pipes are required for HD resolution." The given numbers are debatable but the actual issue is sustainability. Cable lines hardly maintain their advertised speed consistently, only to have lag spikes interrupt your blazing fast speeds when they work as intended. Couple that with peak usage times, and you have a disastrous streaming scenario on your hands. Currently, OnLive has not addressed the sustainability issue. Is the compression technique — you’d better believe there will be tons of compression, so the HD moniker is more a buzzword than anything — going to work on a slider? Will it be able to handle the ups and downs, modifying the output on the fly, or are gamers going to be meet with tons of lag while trying to make a hairpin turn in Burnout Paradise? To top it off, OnLive’s service has a horrible catch 22 to bear. The more popular it becomes, the more its own distribution platform will run into a bottleneck.

It would be great if OnLive could pull off cloud gaming, but they have much skepticism to overcome. Should they achieve the near impossible, OnLive could reinvigorate PC gaming, possibly returning it to the forefront of the gaming market. Unfortunately, with the gaming populace not seeing exclusives or long-term commitment from the publishers, and the base technology of the system being way behind the offering, it doesn’t look good. OnLive should wait until the internet can catch up with its needs or take the Xbox approach by launching and remaining near profitability for some time before releasing a successor system with better profit margins and industry support. Perhaps the brains behind the operation are purposefully keeping certain details like compression technology and price points close to their chests. Until these things are revealed, there are far too many unknowns and strikes against OnLive to envision it succeeding. I would love to be forced to eat my words a year from now because the idea is sound and enticing, just a bit ahead of its time and unlikely to launch.

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