Online Games, On Demand...

Just to prove how diversified, popular, dynamic and in demand video gaming is; we have yet another startup company which, if they can make it work, is really cool.

From http://finance.yahoo.com/news/Game-Over-for-Game-portfolio-14731001.html...

After seven years of development, a startup called OnLive announced today that they have a model which will make video game consoles obsolete and cut into retail sales of videogames on disk.

OnLive will offer high-end video games such as Burnout Paradise City on demand over the internet. The games will run on OnLive's servers in five data centers across the U.S. Gamers won't download the games—they'll connect via the Net to OnLive servers and play the games remotely.

The system works similar to streaming video. But video games are a harder challenge. Games need to react instantly when the gamer pushes a button—if a high-end game has more than about a tenth of a second of latency, the gamer will notice.

Making latency disappear—so the games feel as if they're being played on a console right in front of you—over the balky public internet "is the hard problem that took seven years," says OnLive founder Steve Perlman, who previously co-founded WebTV and helped create QuickTime while at Apple.

Gamers will no longer need a console or a super-fast PC to play even the most graphics-intensive games. Gamers playing OnLive on a computer will have to download a small bit of software to plug into their browsers. For TV, OnLive will send customers an adapter the size of a deck of cards. Plug a broadband internet connection into one end, the TV into the other, and controllers into ports on the adapter.

An added bonus: Since the games are running on a remote server, a game could be started on a PC and picked up later on a TV.

"The functionality was great," says Michael Pachter, research analyst at Wedbush Morgan Securities, who tested OnLive. "Response times were very fast, and I didn't perceive a quality difference between OnLive and console games."

OnLive debuted in conjunction with the Game Developers Conference in San Francisco. Major game producers—including Electronic Arts, Ubisoft, Take-Two Interactive, and Atari—are announcing they'll make their games available on OnLive. Activision has not yet said whether it will be on OnLive. Games for Nintendo's Wii, most of which are produced by Nintendo, "will probably be the last ones on OnLive," Perlman says.

The service won't be available until later this year. Pricing also hasn't been determined. OnLive will probably charge a monthly fee; games could be rented for a few days, or bought for unlimited use. OnLive says it might offer new kinds of package deals. One idea: Let gamers buy a subscription to get an updated version of Madden NFL every football season.

OnLive's backers include Time Warner through its Warner Bros. unit and the software company Autodesk. It's been secretly operating inside Rearden, a technology incubator that also started Mova CONTOUR, maker of the image capture technology used in the movie The Curious Case of Benjamin Button.

OnLive could have the kind of impact on the videogame industry that iTunes had on music, cutting out the need for a physical disk and a device to play it on. That could especially hurt Sony, which is struggling to make its Playstation 3 take off. "Most gamers have a console already, so the effect won't be big right away," Perlman says. "Come the next generation, that's when you might see a big shift."

A lot will depend on how OnLive prices the service. "If the consumer feels that the cost of the service is greater than the cost of a console, it is unlikely that the consumer will buy into OnLive's model," Pachter says. "If (the subscription) is free, it's likely that a lot of consumers will buy in."

Another potential impact: the used-game market. Games played on OnLive over the internet can't be re-sold at stores like GameStop.

All in all, OnLive should help game producers make bigger profits by ending the need to manufacture physical disks and cutting back on used-game sales.
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