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OnLive is no longer fanboy vaporware. The company that turned heads nearly a year ago when it introduced its promising concept for console-free gaming is set to launch in three months.
Come June 17, subscribers will be able to pay $14.99 a month to play top-shelf games on their computers, served on the fly from OnLive's servers. In other words, it's cloud computing for the gaming crowd.
Eliminating console hardware and physical software from the equation, OnLive's success would be bad news for game-rental service GameFly, specialty retailer GameStop (NYSE: GME ) , and console makers Microsoft (Nasdaq: MSFT ) , Sony (NYSE: SNE ) , and Nintendo (OTCBB: NTDOY.PK).
Sure, OnLive is a computer-based service. Folks playing on PCs and Macs aren't often the same breed of gamer as those pounding their console controllers. However, OnLive also will offer a set-top box for gameplay on TVs in the months following its launch. Since consoles' Xbox Live and PlayStation Network services already rely on Internet connections, this should be an easy sell.
So let's go over the losers again:
- GameFly -- which filed to go public last month -- offers a more expensive service that is bogged down with physical delivery logistics and a lack of variety when it comes to instant gratification.
- GameStop will suffer if folks take to the subscriber model. They won't need to buy new games, and they certainly won't be trading in the games they didn't have to buy.
- Xbox, PS3, and Wii systems will naturally suffer if the migration is for real.
I didn't mention the video-game publishers and developers, because they're on board with OnLive. Take Two Interactive (Nasdaq: TTWO ) , Electronic Arts (Nasdaq: ERTS ) , and THQ (Nasdaq: THQI ) are just some of the studios that will be putting out games through OnLive.
Why not? Instead of dealing with costly disc manufacturing, packaging, and bracing for returns, they just let OnLive's cloud handle the fulfillment. Instead of GameStop's high-margin resale business, which eats into the software makers' profits by denying them a cut when their titles subsequently change hands, the studios can collect a piece of the action indefinitely. (In addition to the monthly subscription fee, players will have to pay separately to purchase or rent each individual game.)
There's always a chance that OnLive and the consoles can coexist. Valve's Steam has been around for years, and its digital downloads haven't dented the rest of the industry. Gamers who enjoy titles through OnLive may decide to just buy them for their console of choice.
However, OnLive's hype machine will only get louder. The merits of social gaming -- and OnLive claims to be the first video-game-based social network -- will also draw more media attention.
The future of gaming isn't here yet -- but it will be in three months. Get cracking on those caskets.
Will OnLive revolutionize gaming, or is it just another flash in the pan? Share your thoughts in the comment box below.