Pricing could stunt OnLive growth

Game prices on top of subs and small user base not compelling for publishers or consumers, says Signal Hill

A number of factors are pouring cold water on the launch plans for cloud gaming service OnLive, including an installed base too small to be meaningful for larger publishers, and a pricing model that could prove too expensive for consumers.

That's according to Signal Hill's Todd Greenwald, who also pointed to problems with lag, and no support for home TVs or 1080p HD output until after the June 17 PC and Mac launch.

"While we find the service compelling and exciting, we are somewhat sceptical that OnLive will really turn the gaming world upside down any time soon," wrote Greenwald in his latest note to investors.

"While OnLive enables users to forgo spending $300 on a console, the $15 per month fee adds up to $180 per year, or $360 over 2 years. Additionally, we believe the target audience for OnLive (hard core gamers) really values the packaged good disc version of a game, which allows them to quickly re-sell a title in the used market and gain back $20-30 of the $60 purchase price.

"If publishers try to sell digital-only new release games at a $40-50 ASP (average selling price), we don't think gamers will find the price points compelling," he said.

The service will more likely be useful for publishers to sell older catalogue titles, such as the games already confirmed for launch Assassin's Creed II, Borderlands, Mass Effect 2 which will be 6-9 months old when the service starts.

"Finally, we'd note that even if successful, the installed base will be too small to be material for large publishers like EA, Activision, THQ and Take-Two (perhaps 500,000 to 1 million units, compared with 67 million Wii, 39 million Xbox 360, and 33 million PlayStation 3 units," he added.

As well as a launch date, OnLive said yesterday that it would reveal detailed pricing packages nearer to the date, with long-term deals expected. The first 25,000 users to pre-order the service will receive three months free subscriptions.

Related stories

OnLive shutting down, Sony snaps up patents

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

By Rachel Weber

OnLive expands to Benelux territories

"A highly active and well-connected gaming audience"

By Rachel Weber

Latest comments (7)

Richard DeBarry8 years ago
I can't see myself ever getting this. I don't want to have to buy the games and have to pay a subscription fee to use the service because it will be too costly. It's much cheaper to just buy a console. I wanted to try this out but I guess I didn't know enough about it.
0Sign inorRegisterto rate and reply
Sander Stricker Product Manager Games, Sanoma Media8 years ago
I thought 15 USD per month would give you access to some amount of games already, I guess it doesn't. I think there should be no monthly costs, just the cost of the game (50 USD for a new game). Onlive and the game publisher should take care of the operational costs.
0Sign inorRegisterto rate and reply
Chris Hunter-Brown IT / Games specialist, BBFC8 years ago
The $15 / month is a base subscription. Pricing for game rentals and purchases are on top of that and yet to be decided.

Bill Harris described it as $15 "for a whole lot of nothing" - he's not far wrong at the minute.

I also think they're very brave doing a nationwide launch off the bat. Much better to roll out gradually. I watched a talk where they talked about latency issues and their solution is interesting but I think a combination of pricing and biting off a bit more than they can chew early doors will certainly hold them back.
0Sign inorRegisterto rate and reply
Show all comments (7)
Jeff Wayne Technical Architect 8 years ago
At $15 per month, one would have imagined that would cover playing any game on a stream-only basis. The prospect of paying extra to 'rent' them on top of that seems a tad silly.

As for purchasing games, well the mind boggles how exactly that would work unless they plan to integrate an offline mode like Steam under a DD model for purchases or something.
0Sign inorRegisterto rate and reply
Antony Cain Lecturer in Computer Games Design, Sunderland College8 years ago
It's like Ubisoft's DRM system on speed!

"Buy our games AND fund our DRM server or you can't play... if at any point you lose connection or fail to pay your DRM charge, no more games!"

"As for purchasing games, well the mind boggles how exactly that would work unless they plan to integrate an offline mode like Steam under a DD model for purchases or something."

Little chance of that Jeff, as there's no 'console' to play on offline and your computer never actually receives any of the game files, just a streamed video.

See how it goes over there, can't say I'm itching to get at it though
0Sign inorRegisterto rate and reply
Michael Abraham game designer 8 years ago
it's a nice idea and all, but i can't help but feel that they are trying to move too quickly with this. it's a new thing, and consumers will need to get their heads around it first before they're willing to use it regularly, or recommend it by word of mouth.
- i'd say that something like this needs to be more compelling to establish a strong customer base. (cheaper than alternatives, easier to use, freebies, etc) especially as it's digital based and thus competing with our human nature to horde and have something physical in exchange for our cash. (resale value is all well and good, but lets face it: gamers like having a physical collection of games on their bookshelf/desk/whatever)
0Sign inorRegisterto rate and reply
Vitalii Moskalets Game Designer, GameLoft8 years ago
The biggest problem for me is following: will they be able to support the game for very long-term. Example, StarCraft, CounterStrike, Warcraft type of games, in which you could have fun playing for 5+ years, and with my own disc I can play it for a long time. So players would expect, that they can play the game they bought now, after 5-7 years, and OnLive will need to support this, which means spending on new additional hardware, because they would need to support new games also, with better gfx and so on.

That I think is VERY big spending, and, for players it will be additional monthly price I guess...or the worst variant - after 3-4 years, the game excluded from the available list.

Maybe this technology is just ahead of time.
0Sign inorRegisterto rate and reply

Sign in to contribute

Need an account? Register now.