OnLive debuted at last year's GDC with a service that sounded like magic--they'd stream games running on their servers, in the cloud to pretty much any device that has a screen, all using some fancy video streaming technology. The promise is simple--you'll be able to play Crysis on any device that has a screen and that they can install some software on. OnLive really means any device, no matter how underpowered it is--we've seen demos of OnLive running on everything from an iPhone to a MacBook Air to a tiny box (they call it a MicroConsole) connected to your TV. Because the platform doesn't matter, you'll be able to play with your friends, whether they're on a phone, a notebook, or their beefy gaming PC.
Naturally, the two biggest challenges for game streaming are bandwidth and latency. They say that a solid 1.5Mbps broadband connection is sufficient for SDTV streaming--no resolution was specified, but that typically implies either 480i or 480p resolution. This opens the OnLive door for everyone with broadband--even crappy DSL. To stream HD signals--720p for now, 1080p coming in 2011--requirements start at 5Mbps. According to Steve Perlman, OnLive's CEO, roughly 26% of homes in the US meet the 5Mbps bar today, with more coming online every day. To combat latency, OnLive streams from multiple datacenters around the country--they're in the Bay Area, Chicago, Dallas, Atlanta, the Washington DC area. They're claiming each datacenter can service OnLive customers in an area with a radius of about 1,000 miles without noticeable latency for the end-user. According to the infographic they showed, there are small areas of Montana that fall outside the coverage circles. Residents of Alaska and Hawaii are also boned, but international service is scheduled to come online in 2011. We've only tested OnLive in controlled situations at tradeshows, so it's difficult to say how OnLive's latency will compare to local rendering--whether it's on an Xbox 360 or a PC.
Today, OnLive looks much more like a compelling game-delivery service than it did last year. With a fully-fledged friends list, and the ability to spectate on other people's games, share a clip reel of your best gaming accomplishments with your friends, and chat outside games, OnLive is looking like much more than a front-end for streamed PC games. (Perlman said adapting Red Faction: Guerilla for OnLive took a single engineer about 3 weeks).
Because of the streaming video nature of the service, OnLive is able to do really interesting things with video. For example, the menu background image showing a grid of game videos is actually a live stream of people playing different games. When your friends are playing, you can hop into their game and watch them play--kind of like Giant Bomb Quick Look, sans the pithy commentary, of course. You'll also be able to browse a clip reel of other people's games.
The service goes live at E3, on June 17, and will cost $15 for a single month subscription, with a discounted rate if you subscribe for multiple months. However, it seems that this monthly fee will only unlock the service--the OnLive service won't mimic a Netflix-style all-you-can-eat model. Pricing for individual games and game rentals hasn't been announced yet, but I'd expect them to be cheaper than retail, considering the fact you're paying a monthly subscription. It's also unclear what happens when you've paid for a game but no longer subscribe to the service. I'd assume that the OnLive folks have a solution to that problem, but I don't know what it is now.
The promise of instant purchase and streaming, with no need to spend money on expensive gaming equipment, whether you're talking about a gaming PC or a PS3, is interesting, but I'm not sure I need another monthly fee in my life, and I'm suspicious of services that require a subscription AND money spent on individual goods. For my money, I'd prefer a more expensive all-you-can-eat model ala Netflix and Gamefly or a service whose cost is built into the price of the game (think Kindle and Steam). With per-item costs and a monthly subscription, I worry that OnLive will be just another walled garden.