BT has entered into a commercial partnership with OnLive - a move which sees the telecoms operator gaining exclusive rights to bundle Onlive with its broadband packages in the UK as well as a 2.6 per cent shareholding in the games firm.
OnLive was unveiled in March 2009 following seven years in development and officially launches in the US this summer following a beta trial. BT will announce further details about its launch plans later in the year.
"Entertainment is going to be at the heart of what we offer customers in the future," said Gavin Patterson, CEO of BT Retail.
"The partnership with OnLive complements our existing BT Vision service. It's great for our customers - they'll have access to a huge catalogue of games, available instantly on their TV or PC without expensive hardware.
"And it's great for BT - it will enhance our premium broadband position and we'll be entering into a market that's worth more than £2 billion."
"The UK market is extremely important to OnLive and our video game publishing partners as we expand into Europe," added Steve Perlman, CEO of OnLive.
"We view BT as the ideal UK partner. As gamers are moving increasingly to online game distribution, OnLive delivers video games as a pure form of online media, playable instantly on almost any video-capable device attached to the internet.
"The implications are nothing short of transformative to video games and in time, all interactive media. OnLive is delighted to be pioneering this revolutionary technology in the UK together with BT."
OnLive's launch date of June 17 was announced at this year's GDC. The service, which delivers games directly to a TV, PC or Mac will be accessible for a subscription fee of $14.95 per month and uses video compression technology to stream games using a broadband connection.
The move into cloud gaming by BT will enhance the company's current entertainment offerings from BT Vision, it's on-demand digital TV service.