The Future of Consoles: OnLive?

For those of you that have played every video game console since the Atari 2600 (or earlier for the true nerds), the release of the new one can be both exciting and expensive. Being the first in the neighborhood with the latest gaming goodness is an honor that every true gamer hopes to have. But as always, honor must be achieved by paying a price. Even if we don’t count the dinero spent on pizza rolls and Doritos, the adoption of the new console along with its peripherals, accessories, and games can definitely put a hurt on your (or in some cases your parents’) wallet. Lucky for us, there’s a company out to change that for gamers moving forward.

At the recent Game Developers Conference (GDC), OnLive of Palo Alto, CA, announced its new server-based on-demand games service that utilizes its “cloud computer” network. What do those words mean? With OnLive’s service, gamers will not be required to worry about owning the latest console hardware or games. The games and hardware reside on central servers and leverage video compression to send the images to your computer or television. The quality of the image will depend on the gamer’s broadband connection but it appears the majority of people will be able to get video comparable to the Nintendo Wii worst case and many will receive HD quality.

The service offers a few interesting wrinkles as well:

  • Latency will be low enough to allow multiplayer online gaming.

  • A special MicroConsole will be available for those who want to play on their television; it will support HDMI (define).
  • Gamers will be able to watch their friends compete in their favorite games remotely.
  • Currently working with nine of the biggest game publishers such as Electronic Arts and Ubisoft.
  • No game download time is needed for games or game demos.

As with any announcement of this magnitude, many pundits quickly weighed in on why this won’t work. Many skeptics feel the lag time of delivering the video will harm the game experience. Others feel the library of games could be a sticking point. Reggie Fils-Aime, president of Nintendo of America, said in an interview with VentureBeat at GDC, “Based on what I’ve seen so far, their opportunity may make a lot of sense for the PC game industry where piracy is an issue. But as far as the home console market goes, I’m not sure there is anything they have shown that solves a consumer need.” While OnLive has signed on major game publishers, it appears you will not be seeing Nintendo’s major franchises (e.g. Mario, Zelda, etc.) on the service anytime soon.

With all this in mind, why does this new entrant to the console market matter to marketers? For starters, OnLive will have 100 percent connectivity with its gaming audience. As video game advertising evolves, connected gamers are crucial to delivering relevant branded messages and more importantly receiving measurable data. The connectivity allows marketers to swap out creative and ensure consumers receive the appropriate message. If OnLive’s service is successful, all gamer interaction with any type of branded program will be measured and easy to modify based on performance. The service also presents a completely online transaction model. Gamers will be offered either a monthly subscription or different pricing packages for gaining access to games. This model is built to leverage advertising. Similar to online gaming sites, gamers will be able to interact with advertising in exchange for free content.

The verdict is still out on whether this service will truly change the gaming industry when it releases later this winter. But it has already caught the attention of competitors as Sony trademarked the “PS Cloud” name following OnLive’s unveiling. We will anxiously wait to see the impact and whether it solves the financial hurt gamers feel with every new console generation.

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