OnLive defiant: "We have to prove the business"

A phoenix from the ashes or stubbornly headed for another fall - OnLive is pumping more resources into cloud gaming

It's one year since OnLive launched in the UK at the Eurogamer Expo, handing our free consoles to attendees and reveling in the hype that came with the launch of the first consumer cloud game streaming service.

Now the company is back, but with a significant degree of humility. Over the past six weeks OnLive has gone through a public and damaging collapse, with bankruptcy, lay offs and the stepping down of CEO Steve Perlman. It's been a messy process and a painful one, as Perlman's replacement Charles Jablonski tells GamesIndustry International.

"Suddenly things had to change very quickly and it was extremely painful for those affected"

Charles Jablonski, OnLive

"We'd built a very large organisation and structure but it became clear in the summer that it was a challenge maintaining that kind of financial support and something had to change. Suddenly things had to change very quickly and it was extremely painful for those affected.

"We tried to minimalise that destruction especially as far as our players were concerned. But now we have investors with a very long-term outlook on streaming, cloud and video games for decades," he adds, keen to move on and talk about the future. "So now we have the time to do what we need to do."

Jablonski isn't new to the company, he was chief operating officer before stepping in to fill Perlman's boots, but the crib sheet in front of him full of pre-written answers in a bid to second guess journalists suggests his public relations team is in damage control mode.

On the surface OnLive wants to present an image that the business is unchanged - it's still a games service delivering big budget PC games to consumers via the cloud - this week it added Eidos hit Sleeping Dogs to its line-up as if it's business as usual.

OnLive may have proven that technically, streaming video games via the cloud can work, but following the bankruptcy it's only enforced opinion that this isn't a viable business financially. That's the big question that has hung over it since the company came out of stealth mode in 2009 and still hasn't been answered.

Jablonski is aware of this and the costs involved in making it work, and that means continuing to pump money into a business that is yet to turn a profit.

"If it was working at a profitable business we wouldn't have to go through what we went through," he states.

"If I had to encapsulate what the major strategic change of direction is it's this - this is going to be a business. It's capable of being a great business and that's what we need to concentrate on. But you don't cost-cut your way to success. Businesses succeed because they have revenue. We were very good in proving the technological thesis, we now have to prove the business in the short and medium term."

"We know we need to get more consumers faster. We need to make this a better business faster," he adds.

OnLive has never publicly given out user numbers, even in a digital market where companies can tell any story they like be selectively working DAUs, MAUs, active users, concurrent users or any other stats. It claimed millions of users, but reports in the past month suggested sales were only in the low thousands. And still the company cannot give any clarity on figures, instead suggesting its publisher partners are happy with uptake and OnLive is only behind Valve's Steam service in terms of digital reach.

"It's capable of being a great business and that's what we need to concentrate on. But you don't cost-cut your way to success"

Charles Jablonski

"Yes, to be polite we're still circumspect about the numbers but what I've heard from is publishers we're still one of the largest streaming-type games service that they have," states Jablonski. "And the publishers are still eager to engage with us to get their products in front of as many consumers as possible. Especially here in the UK when a company like GAME has had such a tumultuous year."

Bruce Grove, UK general manager, is also careful to compare the business to Steam but without making the claims himself. "In the last four weeks we've been running around building a new company," he says. "We've taken the assets and the IP of the old company and a big part of that has also been reaching out to the partners and the publishers and working with them.

"They are saying that they want this to happen, to continue because at the end of the day we're the second or third largest digital distribution platform. They're putting Steam at the top and we're sort of there, in their radar."

But he also admits that OnLive needs to be more upfront about user figures if it's to gain the trust of partners and the wider industry. "We've been having a lot of talks about how to represent the numbers better. It just doesn't compare with the way other businesses work. We're thinking about that harder, to be better representing it so it doesn't get muddied in the way that it does today."

Jablonski, Grove and OnLive is insistent that cloud streaming of high-end video games to consumers can still be a viable business, and the recent acquisition of rival Gaikai by Sony is validation of the possibilities the business holds.

"It woke everyone up," says Grove. "Look at the breadth of the company with TV, smart TV, computers, the PlayStation business. It has said, 'this fits perfectly within our consumer business strategy'. And that's something we've always said. Let's deliver content to all the platforms as each device is capable of receiving it. Sony clearly believes that because it bought Gaikai. "

"We're still circumspect about the numbers but what I've heard from publishers is we're still one of the largest streaming-type games service that they have"

OnLive is starting again, a little more cautiously with the wisdom its learned from its own failure. It's defiant, and has the backing and the tenacity to push again into cloud gaming. Whether that proves wise in the long term is yet to become clear.

"We were first to market and we had to get over the hump of getting everyone to believe in this first," says Grove. "If we look at it now three years later there are half a dozen companies out there claiming similar technology, and big players are getting involved. That shift in perception is making it easier.

"As the first to market there's a lot of learning as you go. Now we're in a position to very clearly change the pieces that need to be changed and look at the right business models for us and our business partners. We're in a much better position now than we were six months ago."

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Latest comments (9)

Christopher Bowen Editor in Chief, Gaming Bus7 years ago
It's even worse in the US, Tom, where everyone is capped and infrastructure improvements are held hostage by selective monopolies (read: government contracts that allow one company to own an area; I can get my internet from Comcast, or I can get my internet from Go Fuck Myself). Furthermore, in communities where voters have actually voted to fund their own broadband via the government, major telcos have sued and successfully blocked it (for now). Have to protect your turf.

It's a mess. And OnLive was never the best company for this anyway; Gaikai's going to be amazing once Sony figures out how to use it.
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Graeme Quantrill Mobile App Developer 7 years ago
Regardless of the tech, they need to get publishers onboard. For months they've had "Homefront" listed as a new release. Consumers won't want to wait month for games to become avaiilable.
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Andrew Goodchild Studying development, Train2Game7 years ago
If On Live are the second or third biggest digital distribution platform for PC then I'm really worried for them. Steam is massively profitable. Not sure if Origin is making a profit, but it sounds like it is, Impulse seems to be doing wonders for Gamestop, and way down, Good Old Games is profitable.
So if On Live is bigger than all of those except Steam and maybe Origin, but are losing money whilst the others are making it, without the customer base being the issue, how is it remotely viable any time soon? Maybe the investors should have invested in CD Projekt instead.
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Show all comments (9)
Alex Bunch Proof Reader, ZiCorp Studios7 years ago
@Andrew Goodchild
It's a lot worse that. He said 'what I've heard from publishers is we're still one of the largest streaming-type games service that they have.' That's STREAMING service not DOWNLOAD service. ONE of the largest? I mean who else is there!?

Edited 1 times. Last edit by Alex Bunch on 27th September 2012 7:15pm

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Paul Johnson Managing Director / Lead code monkey, Rubicon Development7 years ago
Please shut the f**k up. Message ends. Jesus!
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Greg Wilcox Creator, Destroy All Fanboys! 7 years ago
There's a film called "Damn the Defiant" which is fitting for OnLive, defiant to the end it seems.

If they want to spearhead a revolution, it would be better as an infrastructure one that makes sure every damned gamer who want this always perfect streaming cloud-ness can get it, get it cheap and game freely with no caps, restrictions or fees that make it a wallet drain after that initial trial period that's always offered with these services.
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Nick Parker Consultant 7 years ago
Full streaming of triple A titles without lag or jitter is some way off unless a new entrant with deep pockets comes up with a new technology solution. From what we know, a mix of progressive download and streaming will fill the gap adequately by downloading a small part of the game to start within minutes so that there is some processing locally. One GPU in the cloud per user is not the answer, we need more virtualisation of processing the game and the deployment of existing network infrastructure on a pay per play basis.
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Joshua Rose Executive Producer / Lead Designer, Storm Eagle Studios7 years ago
This will continue to not work.

As long as Steam has such a large marketshare and has steamworks so heavily integrated into the development process, there's no way for OnLive to get any new titles...

Steam doesn't even have to try to put them out of business, their technology is going to do it for them.... again....
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Stephen Richards Game Deisgner 7 years ago
Don't forget that in theory this is a golden opportunity for Onlive, with an unprecedented gap between console generations. What will Onlive do when Microsoft and Sony's next consoles arrive? Surpassing (equalling?) them graphically will be very hard, even for users with fibre-optic broadband. And then there's the additional lag time... I just can't see who Onlive's target audience is. People who find consoles too expensive would be the obvious market, but those same people are hardly likely to pay for expensive high speed internet.
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