Head in the Clouds

OnLive's failure underlines a harsh truth - there's no future for a consumer cloud gaming service

For a technology which is supposedly going to completely change the way we access and consume videogames, cloud gaming is certainly having a bumpy start. The latest chapter in the saga of OnLive, the hugely ambitious and much hyped cloud service, is perhaps the murkiest yet, with the company being shut down and its assets shuffled quickly into a new company, managed by the same CEO - leaving investors and staff in the original company high and dry.

If that sounds dodgy to you - as it does to a lot of people - that's because it is, albeit not in a legal sense. It's a piece of corporate manoeuvring which is permissible in the US, using a system called "Assignment for the Benefit of Creditors" (basically a pre-pack of a failing company, although the creditors in this instance are unlikely to feel that much has been done for their benefit), but while the legal ends may be neatly wrapped up, the morality of such a move - keeping the same people in charge while dumping staff and investors - is certainly deeply questionable.

"OnLive made some specific mistakes which reflect on extremely poor management and a deeply flawed understanding of the market."

Ours is not really the place to make moral judgments, though. What's more interesting is the question of what has come out in the wash regarding OnLive's market position - and what that says about the whole grand cloud gaming experiment.

The most oft-quoted figure, over the past week, is a number which purports to be OnLive's peak concurrent user figure - around 1800 users. It's tough to extrapolate subscriber numbers from that figure without additional data, but somewhere south of 20,000 seems plausible. Meanwhile, the service was costing around $5 million a month to run. This is not, in any sense, a viable business.

OnLive made some specific mistakes which reflect on extremely poor management and a deeply flawed understanding of the market. The company spent a fortune distributing OnLive streaming consoles for free in an extremely naive attempt to build an installed base - but few of those consoles are actually in use, not least because they were distributed to gamers who generally already own hardware capable of using OnLive services.


Many recipients also discovered that their broadband connections weren't up to OnLive's requirements; and of course, there's the simple reality that if you give someone something for free, they'll consider it to be of no value. A major part of the reason why the razors-and-razorblades model works for games consoles is because having made an investment in a console, users want to justify that investment by acquiring more games. With no investment in OnLive, users felt no such urge. Not only was OnLive wasting its money, it was actively devaluing its own service in users' eyes.

That speaks to the other fundamental flaw with the OnLive business. Who, exactly, was it targeted at? The marketing and promotion for the service seemed to be pretty directly targeted at core gamers and early adopters. Yet they're precisely the people who are most likely to be unwilling to suffer the flaws in OnLive's performance - the lag and graphical degradation which are an inevitable consequence of streaming high-definition interactive content over home broadband connections.

Moreover, OnLive's catalogue of software is largely made up of back catalogue titles, not the hot new releases which the core gamer market might be attracted to. This is a service which could potentially appeal to more casual players - people who don't keep up with the latest releases or want to buy the latest hardware, and don't mind a somewhat degraded experience in return for convenience. Yet it was pushed towards the early adopter market - not least, perhaps, because the casual player market probably doesn't have the broadband speed required for OnLive to work at all. Catch-22.

"It creates a business that's vastly expensive to run and difficult to scale, and which creates additional enormous step-costs every time you want to upgrade your basic hardware."

These are specific problems with OnLive's service, and there are a few more we could explore - but one could make the argument that they don't reflect a fundamental problem with the concept of a cloud gaming service in general. Indeed, there are plenty of cloud gaming apologists lining up to note that OnLive's failure is a consequence of problems with that company specifically, not with the concept behind it.

The reality is a bit tougher. If OnLive had succeeded, it would have answered a number of hard questions regarding cloud gaming - but by its failure, it leaves them hanging ominously over the head of any venture in this sector. The technological questions, regarding the quality of the experience, the speed of broadband, and so on, can be answered simply by the progress of time - broadband gets better, as does video compression technology, so it's undoubtable that we'll eventually be able to provide a cloud gaming service whose quality is indistinguishable from games running off locally executed code. The real question is, why would we want to?


That's not being facetious. My question about cloud gaming from the outset - a question which is only made more vital by OnLive's failure - is an economic one. Yes, it's possible (just about) to store game hardware in huge racks of servers at data centres rather than in boxes underneath people's TVs or in their pockets. But doing so transfers vast costs onto the service provider which have, up until now, been borne by the consumer in one way or another. It creates a business that's vastly expensive to run and difficult to scale, and which creates additional enormous step-costs every time you want to upgrade your basic hardware.

All the high-minded talk about freeing consumers from the need to buy or upgrade hardware looks slightly silly in an era when the most ubiquitous game devices are things like mobile phones and iPads - devices which are now possessed of extremely powerful 3D capabilities, and which consumers are probably going to buy or upgrade every couple of years anyway. The same is essentially true of computers; sure, your average laptop won't play Crysis 2 particularly well, but then again, nor will an OnLive style service - and your average laptop will certainly play the vast majority of games perfectly happily. Again, they're a device which consumers will pay to upgrade every few years anyway - so why, exactly, do cloud gaming proponents think it's a good idea for a games company to take on that expense, when consumers are clearly happy to bear it?

In fact, the only area in which this might possibly make any sense is in the field of game consoles - dedicated game hardware which, indeed, consumers might prefer not to have to buy or upgrade. However, OnLive can't actually play console games - and it's unlikely that any cloud service ever will, unless it's being offered by the console platform holder themselves.

In an era when processing, especially graphics processing, is getting vastly smaller, more efficient and cheaper - when the slim phone in your pocket will very soon pack more graphical punch than the console under your TV - we ought to be deeply suspicious of any business whose core proposition is to completely ignore the power of modern consumer hardware in favour of an outdated and unnecessary approach to centralised computation.

"The cloud, as a general concept, is going to be incredibly important for games."

Don't get me wrong - the cloud, as a general concept, is going to be incredibly important for games. Storing saves, user data and indeed the game data itself in the cloud is a great idea - one which many developers are already using (World of Warcraft, for example, grabs game assets from the cloud as you're playing, allowing players to get started with the game before the entire client has been downloaded).

But the notion of rendering those assets on a server and sending the frames to a dumb client is simply out of step with how modern technology works and what it's capable of. Yes, we can do it - but there's absolutely no convincing economic argument which says that we should do it, except in very limited usage cases such as game demos, which is why Gaikai (a significantly more cleverly focused and targeted company than OnLive) focused on that field rather than making a doomed attempt to launch a consumer service.

Does OnLive have a future? Not unless it can find a buyer, as Gaikai did. The company has some nice technology - but it does not have a viable consumer service. If, as some analysts have speculated, the existence of that consumer service has been actively putting off some potential buyers, then OnLive would do well to shut down its failed experiment and radically rethink what its business is for.

More stories

OnLive shutting down, Sony snaps up patents

Service will end on April 30, latest subscriptions to be refunded

By Rachel Weber

OnLive partners with Extra Life for charity fundraiser

24 hours of free access to 250+ Play Pack titles

By Dan Pearson

Latest comments (40)

Bruce Everiss Marketing Consultant 9 years ago
Cloud gaming is massive.
Maplestory, Habbo, Runescape, Club Penguin, Travian, Neopets and loads of other browser games with many tens of millions of players.
Then there are all the thousands of Flash games that have been immensely popular for many years, Kongregate is immense.

The failure of OnLive had everything to do with how the business was run and very little to do with cloud gaming.

Edited 1 times. Last edit by Bruce Everiss on 24th August 2012 10:29am

0Sign inorRegisterto rate and reply
Adam Campbell Product Manager, Azoomee9 years ago
No future or not yet? I don't think the potential (in ideal circumstances) is in question.

Edited 1 times. Last edit by Adam Campbell on 24th August 2012 9:59am

0Sign inorRegisterto rate and reply
Wesley Williams Quality Assurance 9 years ago
The failure of OnLive had everything to do with how the business was run and very little to do with cloud gaming
Couldn't agree more. I still believe OnLive style services on tablet devices will be massive in the future.
0Sign inorRegisterto rate and reply
Show all comments (40)
Dave Herod Senior Programmer, Codemasters9 years ago
@Adam - I'm not sure, really. One of the selling points is that you don't have to wait to play it if it's streamed. But if broadband speeds in the future become much faster, which is required to stream at high quality, then it won't take long to download a few gigs anyway?
0Sign inorRegisterto rate and reply
Kingman Cheng Illustrator and Animator 9 years ago
Many recipients also discovered that their broadband connections weren't up to OnLive's requirements.
This is exactly what I've been saying from it's earliest days as did many others, I think the heart of the service is great but yes mistakes have been made. But especially here in the UK broadband speeds have been/will be improving but a lot of people still live in places that aren't major cities and aren't getting the fastest broadband available.

I'd say it has the potential to be great but certainly not like this, or maybe I should say not at this moment in time anyway.
0Sign inorRegisterto rate and reply
Henry Durrant Programmer, SUMO Digital9 years ago
Browser games' assets are in fact streamed/downloaded to your local client and the game exe is run through your web-browser, that isnt "Cloud Gaming" as used by OnLive at all. "Cloud Gaming" does not transfer any binary assets or executable to your local client, your machine does no loading, game-logic or 'processing' at all, its just interactive video.
31Sign inorRegisterto rate and reply
Brian Smith Artist 9 years ago
It's still got a future, just not yet and not with Onlive. Everyone could see that these services were out and running before the tech was consumer capable. Gaikai were lucky imo. I guess if it had been consumer friendly right now we would have seen bigger players enter the market rather than two new faces.
0Sign inorRegisterto rate and reply
Robin Clarke Producer, AppyNation Ltd9 years ago
Just to clarify we're talking about the viability of a consumer service to remotely host games via streaming video here. Not whether cloud storage exists.

The OnLive approach is very reminiscent of how Hollywood tried to barge into the games industry with the popularisation of CD-ROM in the 1990s with grainy, unplayable 'interactive movies'.

Take the least sophisticated, most brute-force, and only partially appropriate application of a technology and pitch it as being a taste of the future, where the kinks will be ironed out at some indeterminate point.

And just as we now have the tech to make huge, beautiful FMV-based games but nobody would ever buy them, it's by no means inevitable that improved infrastructure would make a video streaming based gaming service more attractive. CPU and GPU power are already close to being a commodity.

We will see more sophisticated uses of the cloud model - streaming assets and maintaining a persistent world rather than dumbly, wastefully streaming video - but they'll come from creative games companies, not technology companies with patent portfolios.
12Sign inorRegisterto rate and reply
Adam Campbell Product Manager, Azoomee9 years ago

But a bigger selling point is having virtually no system requirements except an Internet connection and the ability to encode a HD video stream given the fact that all the processing is done remotely. My interest would be the potential processing power you can get from large servers - download speeds and how quickly I can access a game isn't a problem - personally.

I think we need to look at all of the advantages of such technology, which could be vast an infinite really. Its a bit too early for it to work efficiently though.
0Sign inorRegisterto rate and reply
Andy Rayson Programmer, Crytek9 years ago
I think this article pretty much gets to the point with the financial problems of transferring the cost of the hardware from the user to the provider. Somehow this cost will have to be transferred back to the user. Even factoring in the reduced cost per user from shared hardware it will always be more expensive to render it on the server than not.

From my experience of onlive the poor quality of the rendering and video compression coupled with lag really get in the way of enjoying the game. Don't get me wrong I've used the service to try out games a few times but then if I like it I can get a better experience by buying the much cheaper boxed version from Amazon and running it on my own computer. Even the few hundred spent on the computer is soon offset by getting the games cheaper.

@Bruce - While the games you listed make use of the cloud to store data and maintain the world they are not really what this article is talking about which is rendering the game on the server and steaming that to the user. Those games are still rendered on the client by the browser and flash etc.
3Sign inorRegisterto rate and reply
Tommy Thompson Lecturer in BSc (Hons) Computer Games Programming., University of Derby9 years ago
I agree with Robin. The idea is promising, but the practicality of the implementation and the reality of existing infrastructure will not yield large returns for this kind of company.

While we can certainly argue their bizarre business decisions - of which ignoring the casual markets strikes me as critical - OnLive was and still is doomed to fail. It's the proof-of-concept. In time the process will be refined and the services more manageable. We now watch Sony and their handling of Gaikai with much anticipation.
0Sign inorRegisterto rate and reply
Max Brode Videogame Consultant 9 years ago
Convenience is everything. Nothing gets to people's time more easily, nothing is better at forming habits and thus creating return customers. OnLive is the most convenient hardcore gaming service around, as such the basic concept will eventually dominate, unless something even easier to use comes along. Look at YouTube, that has enormous server and infrastructure cost as well, and didn't use to make any money either. I don't know whether the recent step-up in advertisement has made it profitable by now, but it's dominance on internet video distribution is unparalleled.

Lower hardware costs will benefit the streaming service just as much as the consumer, and consumers are getting more and more used to not spending money on dedicated hardware for anything, so the addressable market of stream-capable consumers will grow and the number of console buyers will shrink relatively.

F2P, subscriptions, improved experience, tailored sales, advertisement revenues - these are all options to build a consumer service upon. OnLive obviously hasn't got this right, yet. As somebody they successfully targeted at launch and got to try the service, I felt their subscription was full of games I'd already played and the experience of newer games was significantly inferior to console at the same price point (i.e. the relationship between quality, convenience and prize wasn't right), but in theory this is all fixable.
1Sign inorRegisterto rate and reply
Rick Lopez Illustrator, Graphic Designer 9 years ago
I dont understand, if we look at 8-bit games, they only weight a few kilobytes, 16-bit games only a fe Megabytes and now games whey a few Gigabytes. So naturally we may have faster connections in the future, but games grow and ask for more hardware. This is why i think consoles will thrive. Cloud gaming service may exist, but for smaller games I dont think the potential is there for a AAA expirience. Plus the problems that come with billing and DRM and dependancy to be online and at a place that has a connection.

And alot of online games require continuouse updates to be able to offer something fresh. Its like you spend money to continuisly develope a game for the life of a game. If you stop adding new content, players will easily leave in the millions. I dont think cloud gaming is any cheaper than other platforms. Its not like you can put out a game and expect people to keep playing it after they have exhausted all the content. i doubt farmville, maple story or world of warcraft, would be as succesful if the games hadnt had more content developed for them since release.

As for me personally. I was never interested in the technology. I always like the idea of having a copy of the game. And Im not looking foward to any cloud gaming service. Besides I dont like the fact that alot of these games penny the shit outta you. For every new feature, ability in the game you have to pay. then the service goes down, you lose access to these games.

Edited 1 times. Last edit by Rick Lopez on 24th August 2012 1:30pm

2Sign inorRegisterto rate and reply
Bruce Everiss Marketing Consultant 9 years ago
Smart TVs have the potential to create huge demand for cloud gaming.
0Sign inorRegisterto rate and reply
Peter Dwyer Games Designer/Developer 9 years ago

Interactive video?

On the server there is an entire game session running. The client on your tablet or whatever device is sending control command to that game session in order the game!

It requires far more resources than a simple interactive video and maybe that's half the issue here. It doesn't look like many people actually understand what is involved in running a successful cloud gaming system. It's very resource hungry, especially if the aim is to host millions of AAA gaming sessions. It doesn't look like the onlive crew had a clue what was actually going to be involved either!

Edited 1 times. Last edit by Peter Dwyer on 24th August 2012 2:10pm

1Sign inorRegisterto rate and reply
Potato Poh-ta-toe
Fundamentally, I wonder why did Gakai strike lucky, and OnLive strike out.
We're they fundamentally the same concept managed and handled differently or was the corporate structure of Gakai mor attractive to Sony?
2Sign inorRegisterto rate and reply
Joshua Rose Executive Producer / Lead Designer, Storm Eagle Studios9 years ago
OnLive suffered from two main problems (in my opinion).

1) The gamers in the market OnLive appealed to, generally don't have the connection necessary to run it (as mentioned in the article). That being said, the world as a whole does not have the internet infrastructure to handle cloud gaming on a massive scale. It would take at least five years of infrastructure upgrades to handle cloud gaming on a massive scale. I am referring to the interactive video streaming cloud gaming, not saving your games in 'the cloud' and stuff like that.

2) OnLive hardly had any new release titles. As mentioned in the article, they had almost all back catalog titles. Why is this? Hmm, gee I wonder... Maybe it has something to do with 2/3 of all new releases being wrapped with SteamWorks DRM. Having been wrapped with SteamWorks DRM, it makes it impossible to wrap the game with whatever technology OnLive uses to capture controller input and make the game streamable.

What I've learned after speaking to a (now previous) OnLive employee this past E3, is that people playing OnLive games in a multiplayer mode, can only play with other people also playing that game on OnLive only. Which suggests some sort of API integration necessary for multiplayer capabilities. Not knowing a lot about multiplayer libraries and their interactions with the OnLive service, I can only speculate.

I think if OnLive had been able to get access to new release games, things probably would have been different. I'm not saying they wouldn't have gone under, but the circumstances would have changed. You can't just go out and buy thousands of server blades and stick them in data centers that cost 5 million to run per month. Get a small amount, then increase as needed. 5 million a month to run the servers alone??? What gamer is going to even bother subscribing to OnLive if they can't get new releases anyways? How are you supposed to support a 5 million a month overhead, without the influx of new gamers due to availability of new release content?

The downfall of OnLive was largely due to planning errors (huge planning errors), but I also believe their downfall was not solely their responsibility. The integration of SteamWorks into so many new release titles today makes it impossible for any other service(s) to do business. OnLive's inability to do business wasn't even related to features they had that were better than Steam which would make them more appealing. If you don't have the content gamers want, it doesn't matter how many bells and whistles your client software has... The success and failure of digital distribution and cloud gaming and all future innovations in the digital distribution industry, will rely largely on availability of content. Build it, and they will come... Don't build it, and they won't know you exist.
1Sign inorRegisterto rate and reply
The case with OnLive is fairly straightforward, they grew their infrastructure way too quickly, with no intial customer base and little history in video-games. Do OnLive's troubles signal the end of Cloud Gaming? Certainly not.

Rob is right in pointing out that Cloud Gaming requires massive investment, which is exactly why you need to be 100% sure you can grow your player base and recoup your capital. This is where OnLive fell down.

Had OnLive been run by a comapny with a large and established player-base that could have been transfered over (Valve, Origin, GameFly, Microsoft are 4 obvious choices) the story would have been very different.

In the big picture, G-Cluster, Playcast and CiiNOW are growing steadily and split costs and revenues with telco operators, a model proving to be very sustainable. Massive investments are continuing to be made, even today a new service, Agawai, has launched - Executive Chairman of which is Peter Relan, CEO of Crowdstar.

Cloud Gaming as a consumer service is far from dead, it is only just getting started.

Edited 1 times. Last edit by Alex Manessi on 24th August 2012 3:56pm

0Sign inorRegisterto rate and reply
Thanks for the elucidation of OnLive. In contrast, lets look at Gaikai - why were they successful/lucky?
Was it a case of better business savvy, right place, right time, right trajectory?

Lastly - is OnLive V2.0 going to be any different (gazing into the crystal ball?)
1Sign inorRegisterto rate and reply
Alison Cressey consultant 9 years ago
OnLive failed in my opinion for 1 major reason:
Not understanding the target consumer : Core gamers want fast/instant access to great games .
Providing back catalogue on sometimes slow broadband speeds (depending on your location) does not meet these basic desires .
Not sure what they offered that was unique to the gaming experience.
1Sign inorRegisterto rate and reply
The two companies aren't really comparable. They had compeltely different aims and busienss models.

Gaikai simply didn't invest anywhere near the same amount of cash in their infrastructure as OnLive did. They had much lower capacity and therefore overheads - after-all, they only ever offered demos. They charged publishers/retailers for every minute a demo was accessed (very easy to calculate costs and a stable way to build revenue).

Gaikai proved their technology, monetized to cover their (by comparison) very low overheads, and when the time came, sold at a good price.

Gaikai was made to be acquired. OnLive's ambitions were far greater.
1Sign inorRegisterto rate and reply
John Pickford Owner, Zee 39 years ago
FInally someone has come out and said this. Centralising processing is daft and old fashioned. CPU cycles are cheap, Bandwidth is scarce.

The cloud is a great concept for data, terrible for processing.
10Sign inorRegisterto rate and reply
I'd like to think that cloud gaming ala onlive is the saviour of big budget single player games, for one reason only: it's the ultimate anti-piracy measure.
Although for the reasons outlined here, I don't think it will happen. Gaikai, afaik, never bothered to target end-users with a subscription based service and concentrated on demos instead. Which is where the future for them will be I guess, providing playable PS4 demos to PS3 users, and generally save gamers the trouble of downloading a 10 gig demo which they might stop playing after 5 minutes.

There's also F2P. It just doesn't make any sense for a provider to pay dearly for the processing side of things when 95% of your customers aren't even paying for the service.
0Sign inorRegisterto rate and reply
why is nobody mentioning apple's assumed refusal to release the onlive app for iOS?

i think onlive really banked on mobile adoption with a bound bluetooth controller, but the only deals they could land were on android tablets which are just now climbing out of the market share shitter.
0Sign inorRegisterto rate and reply
Concur, also centralizing such a system introduced addition issues, one major disaster at a data centre could leave large numbers without games or indeed other products if such a system takes off, whilst yes economy of scales are involved that same economy of scale is applied to consoles, so I see no real good reason for such a system, its like someone looked at an old mainframe system and thought that's a good idea let's re-introduce it, not really comes to mind, de-centralization is always preferable for security (and more than just the software type) purposes if nothing else, I could see on-live finding some ground among casual gamers, but the average casual gamer's broadband connection will have to speed up before even that, I doubt it'll ever appeal to the more hardcore.

Edited 2 times. Last edit by Alexander McConnell on 24th August 2012 9:00pm

0Sign inorRegisterto rate and reply
Greg Wilcox Creator, Destroy All Fanboys! 9 years ago
Been saying this for years and we're in for more of this if people don't wake the hell up an realize that until EVERYONE can get that perfect connection and keep it 100 percent of the time (yes, 24/7, no exceptions), it's not going to be the future. If someone someplace can't game when they want, even if it's because of a service update that takes something offline for a but, there will be whining and lawsuit threats (which are silly if it's a little service hiccup).

And wait... OnLive has basically swapped out the old building and employees for a new building and employees with the same people in charge? Oh, yeah, I'd want to work there tomorrow, alright (he said, sarcastically). Who wants to bet this will repeat itself and probably faster this time? Unless, of course smart people decide NOT to want to work there because they'll get screwed at some point...
1Sign inorRegisterto rate and reply
@ Greg + 1

I can see the future of Cloud, but it s probably not Gaikai or OnLives version. To be frank, i wont be surprised if internet connection gets worse! One cant even get a decent mobile connection on a train. With CMEs flaring further, chances are the power grid may come down even over the next few years
0Sign inorRegisterto rate and reply
Bruce Kennedy BAhons Creative Director, Kennedy Monk Limited9 years ago
I'm a big Onlive fan and player, though sadly in the minority clearly!
I agree with most here - the potential is great, but the world's broadband at large is just not fast enough to be ready for it yet.
I also think there is a second Elephant in the room here: If Apple had let them on to the iPad (not likely anytime soon!) they would have been home and dry by now.
I hope Onlive prevail and go on to the success they really deserve. In my view, ultimately, it (or something similar) is definately the future of gaming. Just a case of when everyone (i.e: the consumer) catches up to it.
0Sign inorRegisterto rate and reply
Wow... I've only been saying this about the economic model since OnLive launched.

Suddenly, with OnLive's collapse it seems people are starting to agree with me.

In general I liked your article however this statement is wrong in at least two ways:
" The technological questions, regarding the quality of the experience, the speed of broadband, and so on, can be answered simply by the progress of time - broadband gets better, as does video compression technology, so it's undoubtable that we'll eventually be able to provide a cloud gaming service whose quality is indistinguishable from games running off locally executed code. "

First of all, the network issue with OnLive is less bandwidth then it is latency (latency is what produces the lag.) Until Einstienian physics is revoked, the speed of light ensures latency of communication over long distances.
Secondly, while networking bandwidth does increase over time, so do the local gaming machines, game complexity, and their hunger for bandwidth. It is not at all clear that the network will improve ahead of the need curve, in fact history suggests otherwise.

Edited 2 times. Last edit by Jeffrey Kesselman on 25th August 2012 6:43pm

0Sign inorRegisterto rate and reply
"Cloud gaming is massive.
Maplestory, Habbo, Runescape, Club Penguin, Travian, Neopets and loads of other browser games with many tens of millions of players."

None of those games are remotely executed. They execute on your local machine and communicate with servers as part of the game logic. You might as easily call WOW a "cloud game." But all this is straining the definition of the term from simply empty to truly meaningless.

None of it has to do with OnLive's attempt to put game execution an internet away from the user, which was ill concieved from day one.
8Sign inorRegisterto rate and reply
Paul Shirley Programmers 9 years ago
@Alex Manessi

Cloud gaming is a classic 'solution in search of a problem'. The difference between OnLive and Gakai is Gaikai chose to 'solve' game trials and remembered to monetise it by offering a service to suppliers. OnLive chose to directly monetise consumers but at no point presented a believable plan for covering their ongoing costs or attracting paying customers.

I only use OnLive to trial software, for a 30min session I can live with the drawbacks - and OnLive lose money every time I do it. Until there are substantial improvements in the tech and available bandwidth it will remain a 2nd rate experience that few want to invest extended lengths of time in.

Edited 2 times. Last edit by Paul Shirley on 25th August 2012 8:27pm

0Sign inorRegisterto rate and reply
@paul -- exactly
0Sign inorRegisterto rate and reply
@ Dr Chee,
" In contrast, lets look at Gaikai - why were they successful/lucky?"

Paul summed it up precisely correctly. Although their technologies are similar, OnLive and GaiKai went after completely different business plans. Gaikai's made sense, OnLive's didn't. End of story.(I actually wrote a whole blog on this at the time of the purchase. If you would like to read it, here is the URL :
0Sign inorRegisterto rate and reply
Thanks Jeffrey, will certainly check it out!
0Sign inorRegisterto rate and reply
I agree completely with this article, and always thought the OnLive model was doomed to failure. Anyone who confuses what OnLive is trying to do with "browser based" gaming (which is not 'cloud' in anyway) doesn't understand the underlying tech well enough.
0Sign inorRegisterto rate and reply
robert troughton Managing Director, Coconut Lizard9 years ago
Where I think there's a strong market in cloud gaming, now, is in instant-play demos ... the idea that, instead of watching a pre-made hi-def YouTube video, you would play a game for 5 minutes before deciding whether or not you want to buy it. That makes sense to me - and it would make excellent sense on a new console, such as the next Playstation and Xbox. Because downloading a 1gb game demo sucks - and reduces the chances of a consumer buying that game...

Developers have for a while now been complaining that consumers don't get much chance to try out their games to see how cool they are ... consumers stick with games that they know or strongly believe will be great because they really don't know whether or not your game is as good... retailers' demo stations are largely used to demo the games that consumers are buying in droves already ... so, yeah, I can see cloud gaming working - and I can see it working soon.

If we can make it easy for consumers to try our games, quickly, without a half-hour download, surely that's a good thing?

OnLive's business model - full online cloud gaming - undoubtedly was too soon... but maybe the reboot of the company will approach things differently.

There's a technical reason why Gaikai is better than OnLive by the way... Gaikai's video codec was a fairly standard model which was easily shifted onto the GPU with nVidia's Kepler architecture. They shaved 30ms off the lag by getting rid of an external video encoder - everything is done on GPU and sent straight down the pipe. Maybe with the reboot they can also address this disadvantage - though if the tech itself is rebooted then what exactly is OnLive..? (what's their value if their tech needs a reboot?)
0Sign inorRegisterto rate and reply
Paul Shirley Programmers 9 years ago
@robert troughton

When I compared OnLive and Gaikia it was instantly obvious Gaikai had traded frame rate for higher rendering quality. Neither had acceptable latency so maybe that's the right choice but Gaikai weren't achieving anything but better render quality.
0Sign inorRegisterto rate and reply
Henry Durrant Programmer, SUMO Digital9 years ago
Its "Interactive Video" becaue that's what your client recieves, the OnLive experience is your gamped inputs being sent to a cloud-based server running your game that renders the video-frame for your input and sends the video-image back to you. Interactive video.
(Albeit its runtime-generated video not pre-rendered-clips ).

Edited 1 times. Last edit by Henry Durrant on 28th August 2012 11:03am

0Sign inorRegisterto rate and reply
Nick Parker Consultant 9 years ago
I'm a bit late to this debate, but a start-up b2c technology on this scale is always a challenge. To build a b2c infrastructure to deliver high end streamed games requires deep pockets and will be for those companies who have built up cash reserves from other products like Apple, Sony or Microsoft. The b2b streaming solutions are a safer bet as they have lower overheads and are less at the mercy of fickle consumers even if they have to deal with publishers, developers, online platform owners and telcos.
0Sign inorRegisterto rate and reply
Jeffrey Kesselman CTO, Nphos9 years ago
"FInally someone has come out and said this. Centralising processing is daft and old fashioned. CPU cycles are cheap, Bandwidth is scarce."

actually I've been saying this since online launched. I posted pointers to my old blogs in another post.
0Sign inorRegisterto rate and reply

Sign in to contribute

Need an account? Register now.