We talk to OnLive founder, president and CEO Steve Perlman

The revolution will be digitized

Before this generation of consoles, the gaming market was much more skewed in the PC’s favour. It might not seem it now, but competition between consoles and PCs for the contents of gamers’ wallets was fierce, and most of the development innovation came from the PC and flowed down to the consoles, not the other way around.

The enthusiast PC market is still largely driven by games – there are very few other applications that require cutting edge processors and graphics hardware. And while many firms in the industry make a lot of money out of it, there’s no denying there are now many more people buying games for consoles rather than PCs.

With the launch of the Wii, the Xbox 360 and the PS3, support in the games industry turned very much in favour of Nintendo, Microsoft and Sony – the reasons for which are still a subject of debate. As well as piracy (its always been much easier to illegally get your hands on a PC game than a console one), one of the main arguments against the PC as a gaming platform is the cost of maintaining it with up-to-date components. Consoles, which represent a single initial outlay for their entire lifecycle, are now around five years old in some cases, and still at the very forefront of the industry. Try playing the latest releases on a five-year-old PC, and you’ll find results to be less slick.

Unless, of course, you take the processing away from the user’s computer. That’s what OnLive does in a nutshell – a series of ultra-high speed servers do the work, and then stream a game’s imagery through to the user via high-speed internet. Even low spec PCs can play some of the latest games. The concept is revolutionary in scope, throwing one of the most important sectors of the PC market on its head.

So much so that prior to its launch, many questioned if it was even possible to do what they claimed, bearing in mind the huge latency issues that come with video compression. “I would like to say that there was some kind of silver bullet that solved all these issues, but it turns out there wasn’t one, or at least we couldn’t find one,” Steve Perlman, OnLive founder, president and CEO tells us. “We recognised just how significant and transformative this would be, if we could get it to work. So we realised the only way to really solve this thing was to come up with a wide range of solutions. Dell has been making servers for us with custom silicon and custom hardware – we’ve secretly been working with them for a number of years, and they can crank these things out as fast as we want them. We have one of the largest server deployment of GPUs in the world; certainly it’s the largest Dell has ever done, and certainly by the end of this year it will be the biggest in the world.”


While the firm may have conquered the technical issues, a larger obstacle would be opposition from the games industry itself. Without backing from the major publishers, no system of its scale would have a chance. Luckily, then, big name firms like EA, Ubisoft and 2K Games flocked to OnLive in their droves, mainly attracted by the death blow it deals to piracy, and the fact more revenue will flow their way.

“The publishers are subject to the same market forces that retailers are,” says Perlman. “The publishers are happy to lower their prices if the demand for a game drops off. The difference with OnLive is the money will be going to the publishers rather than the retailers, which will mean more game development and more money funnelled into existing games. And frankly it gives the publisher the opportunity to lower the price further. They have to price their games expecting a large percentage of the revenue is being funnelled off into used games. So now if they don’t have to do that and also if they don’t have money funnelled off from piracy, that gives them the chance to lower the
price of the games.

“A number of publishers have said they’d not only like to do that but have also come up with new types of packaging to make them episodic. There’ll be a lot more packaging opportunities once we get away from the constraints of physical media."

While the console world is still very reliant on that physical media, the PC market has been shifting away from it, with download services like Steam. Indeed, far from a threat to the PC gaming space, Perlman sees OnLive as providing a shot in the arm to what some see as a flagging market.

“A lot of people have said that people are dropping like flies in the PC gaming world, because they can’t keep up with the hardware costs. And a lot of gamers are disappointed at the limitations in the console world. Consoles are five-year-old platforms now, and there are no new ones on the horizon. So for a lot of folks, they see this as a really nice adjunct to the PC gaming world. They get to share their world with a lot of other people that perhaps wouldn’t have the time or resources to get into it. We are going to run into people who will say the graphics aren’t as sharp, or that the latency is higher, but what can I say? I think they have a very narrow view of the world,” Perlman comments.


While the service currently runs at 720p resolution –lower than many high-end PC gaming rigs – there are plans to make the service higher quality. And there are benefits to using the network of ultra-power servers as the processing hub, which could outstrip anything a gamer can have in their house.

“The games that are being developed now for OnLive, for when we do have a large install base, have capabilities that you can’t achieve on any local rig,” continues Perlman. “We have something called Mova on the site to demonstrate that power – it’s a computer-generated face that most people would think was a live person. Imagine what games are going to be like when all the characters look that good.

“We’ve tried to make it as easy as possible for people to go and give it a go. It’s the beginning of a new age, and we did the best we could for this first shot. But it’s only going to get better. The great thing about it is that even as it does, you won’t need to upgrade your machine to feel the benefits. We’ve made games digital media – but it’s just the beginning of this era.”

OnLive has already launched in the US, and we understand the firm will be looking to roll out the service in the UK earlier than the 2011 date projected by BT, which is partnering with the firm in this country. OnLive insists it isn’t directly competing with the current stable of PC gaming – yet – but there’s no doubt the status quo will be shaken up to some extent by the launch. Just like the French revolution, the effects of this one probably won’t be clear for some time.

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