GDC 2009: Four Challenges For OnLive's Gaming Service


Posted March 28, 2009 - By Raymond Padilla

When the news of the OnLive gaming service broke on Monday evening because someone doesn't know what an embargo is, it caused quite a buzz at GDC 2009. For about 24 hours, "What do you think of OnLive?" was the first question most people asked me at the show. Not too long after that, it seemed like everyone forgot about it. Hell, some people were even making jokes about it on Friday: "Oh, you have an hour between meetings? Go play some OnLive!" While I hope that the service does well, I still don't buy all the flowery articles I've read on OnLive. I'm not saying it's Phantom 2.0, but I see some hurdles -- some major, some minor -- in the service's way. Here's the rundown.

1) Internet Service Providers (ISPs): This is the biggest issue I see with OnLive. A few North American ISPs are already using bandwidth caps, bandwidth throttling, and bandwidth shaping. Several others are experimenting with these "features", with plans to roll out limits in the near future. I don't care how revolutionary OnLive's compression scheme is -- delivering 720p graphics requires a lot of bandwidth. For many customers, this would either limit their OnLive play time or make it very expensive.

2) It's Easier to Sell a Box Than a Service: Yes, I know OnLive has a cute little microconsole. That's just one delivery mechanism and not really what OnLive is about. It's a service. It's more difficult to market and sell a service than a physical box. While I'm sure gamers that are interested will do the proper research, I doubt general consumers will. Casual gamers can see that Nintendo's Wii is different and easy to use. They can see that Sony's PlayStation 3 offers high-quality gaming and Blu-ray movies. They can see that Microsoft's Xbox 360 offers better graphics than Wii and a lower price than PlayStation 3. Explaining what OnLive is, what it offers, and why it's worth paying a monthly fee for will require a ton of work. Furthermore, the company is establishing a new brand that doesn't have the benefit of playing off of a household name like Nintendo, Sony, or Microsoft.

3) There Are No Exclusives (Yet): It's going to be hard for OnLive to differentiate itself without any exclusives. I don't care what David Reeves says -- exclusives are still an important way for consoles to differentiate themselves. While OnLive is a service, it will compete with PlayStation 3, Wii, and Xbox 360. Those platforms have established franchises that can only be found on their systems. Why should a gamer go with OnLive when it can play all of the same games on a traditional machine, as well exclusives?

4) Competing In the PC Market: As for the PC market...that's a different battle. PC gamers are a dedicated group that spend a lot of money on their rigs to play the latest and greatest games. I don't see many enthusiast PC gamers abandoning their upgrade cycles and taking a risk on an unproven service like OnLive. As for the millions of PC owners that are casually interested in games, will the titles that OnLive will offer appeal to them? Or are they content with something like Diner Dash 2? If they fall into the former category then is OnLive really worth it? The monthly fees will likely add up to the cost of an annual graphics card upgrade and a few games. Unless they're totally taking advantage of the variety OnLive will purportedly offer, I don't see the value.

Anyway, I'm looking forward to hearing more about OnLive at E3 2009. The technology is interesting and there's a chance that it could change the gaming world. Right now, I think that chance is slim. I'd love to be wrong though.

What do you think? Would you go with a service like OnLive for all your gaming needs? If not, why? What are your concerns about this service?

GDC 2009: Four Challenges For OnLive's Gaming Service


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