OnLive's Tiny Cloud Console Could Revolutionize Gaming

OnLive has unveiled its new gaming system, which consists of a controller and a tiny box that hooks up a TV to the Internet. All the really important stuff is in the cloud. "This is revolutionary. For a hundred bucks, you get a product that will never become obsolete. You get a game that costs less than it does on the Xbox or PS3," said Rob Enderle, principal analyst at the Enderle Group.

OnLive has created an adapter that brings its cloud-based, instant-play video games to the TV -- and it's hoping to attract the whole family, not just the hardcore male gamer, to partake in the action.

OnLive is taking orders now for its MicroConsole and an accompanying OnLive Wireless Controller. The US$99 bundle, which includes any free game from the company's collection of 35, will begin shipping on December 2. The console is not much larger than a VHS cassette, since all the technology is in the cloud.

OnLive's system offers instant-play new-release video games. The hookup connects the adapter to a broadband Internet connection and to the TV. Thirty-five games are available to demo, rent or purchase.

System users can also play the games on a PC or Mac via a browser download. Later this year, OnLive will add a monthly flat-rate option that provides unlimited access to a broad library of games.

Attracting a World of New Gamers

With the addition of a TV console, OnLive intends to reach a much broader audience.
"Right now, we're still getting the early adopters, the hardcore gamers," Joe Bentley, VP of engineering at OnLive told TechNewsWorld. "The console will bring us a younger market, and we expect to attract a lot of families. Through the Christmas season we will broaden out to more families, adding titles like 'Lego' and 'Harry Potter.' You'll see it in our advertising campaign. We're going square up the middle."

The company also hopes to attract the growing market of social network gamers.
"We have some social networking games," said Bentley. "In Q1, we will enhance our selection of social networking games. We'll get more of these games with time."

OnLive is modeling its offering on Netflix (Nasdaq: NFLX), charging a monthly fee for unlimited access to a broad and deep catalog of games.
"It will be coming up next month and we'll soon disclose what that costs," said Bentley. "You'll get rentals, free trials and grab bags for any budget. You'll see things move from just the AAA games to a large backlist."

Smoothing out the Internet for TV

The up-and-down quality of Internet connections is a technical problem OnLive worked through in the development of the TV-based system.
"The connection will be better on the TV. We've been working on the MicroConsole for three years and we've redesigned the board and switched out components," said Bentley. "There was a major shift in early October with our WiFi release."
To facilitate TV connectivity, the company works its Internet connections directly through the providers.

"This adjusts to your Internet connection and creates a feedback loop -- it's a very adaptive protocol," explained Bentley. "We brought in world-class people to work on this problem. We say that we optimize the Internet. When you connect over Comcast (Nasdaq: CMCSK), you're connected over the Comcast network rather than the public network. It gives the best service possible."

Hot New Technology

So far, the system is getting positive reviews -- not just as a gaming device, but also as a tool that brings the Internet to the TV.

"It's a pretty phenomenal product -- one of the 10 most powerful technologies released this year," Rob Enderle, principal analyst at the Enderle Group, told TechNewsWorld.

"This is revolutionary. For a hundred bucks, you get a product that will never become obsolete. You get a game that costs less than it does on the Xbox or PS3. If you can do high-resolution games, think what else you could do -- you could virtualize a desktop."
Because the technology is in the cloud, OnLive may dodge the technical snafus that usually accompany a new console release.

"Very possibly, this is the first time we seen an implementation that doesn't have the performance problems that previous game consoles had," said Enderle. "It will really open up the market for console gaming, which has been in the doldrums. Consoles are getting old. They're based on technology from the 90s."