IndustryGamers - Informing the Games Industry

OnLive CEO Talks About Post-Launch Challenges

Posted July 16, 2010 by M.H. Williams

As the first cloud-gaming service to market, OnLive is in the position to define a market. Whether cloud-gaming continues could depend on the success or failure of this first venture. Since its launch on June 17, OnLive says everything has gone smoothly, but there have been some bumps along the way. Some questions remain about the service's ability to handle increased user load and the still-unreleased MicroConsole. Online CEO Steve Perlman sat down with Cnet to talk about where the service is heading in the future.

Perlman admits that so far OnLive has gotten a “far bigger wave of people wanting to get on than we expected,” explaining that the service has already reached subscriber numbers projected for the Fall of this year. He says the resources are a bit strained at the moment, but more are coming in the form of new servers with the help of Dell and new datacenters. 

“We ran out of room and literally ran out of floor space in our data centers, but there are other collocation centers nearby that we're in and we just literally emergency-moved racks to those colos and brought in fiber and turned it on, and that was it, more users are on,” said Perlman.

Perlman is enthusiastic about OnLive's ability to be something for most consumers. “We haven't done it yet, but it's easy to make it so that a Web site can link right into a game. The nice thing about it is that you can have more than one purchase path. Maybe we refer you to Steam or to DirectDrive to go and purchase the download,” he told Cnet. “We're super happy if people want to use us a demo service, as a rental service, as a purchase service, as a social network, we have folks that are just watching games instead of TV.”

“If you're a hardcore gamer and you've got a big rig and you want the highest quality graphics then OnLive is not the place where you're going to play your high-end game,” he added. “Then again, to not have a huge download in order to trial something before you make the purchase decision, why not? Just click OnLive and give it a go. If you like it, terrific. Download the thing from Steam or order a copy on DVD.”

The OnLive service is currently free to gamers due to subsidies from AT&T, with $4.95 a month being the reported subscription fee after the first year. Perlman says that number is tentative, with the worse-case scenario being a bit higher. “As a start-up we have to be completely cautious about what we promise in terms of monthly costs.”

“If you take the worst-case scenario, then we'd have to charge $14.95. We were worried that once we had new games, everybody would be piling on at the same hour of the day. It turns out that isn't the case,” Perlman said. “Some games are casual, we have driving games, we have first-person shooters, we have puzzle games, the audience for each of those different games has its peaks at different times during the day, but the same servers of course are used for different games, so that spreads the load over the day. It means our worst fears about worst case peak loads turned out to be unfounded, and we're able to charge a much lower price." 

There's been some worry from current OnLive subscribers and potential customers about the lack of local versions of titles for users. The prevailing fear is a user could pay for a title through the OnLive service, only to have that title taken from them some years later. The OnLive CEO believe gamers should have nothing to fear in the short-term, but agrees that it could become a problem many years down the line.

“We have to put a stake in the ground somewhere. We could put five years, we could put two years. It's less of an issue about the licenses evaporating, and more of an issue of whether or not we continue to maintain the operating systems and the graphics cards to run those games,” he said. “I think the probability of us pulling a game in three years is on the order of 0.1 percent. It's also highly unlikely that a game server will evaporate after three years, but we have to allow for that possibility.”

“We do expect these games to be available indefinitely. But there's nothing I can do to give someone comfort who really wants to own the physical media. If we told them it was around for 10 years, they'd still say we're not so sure the company is around in 10 years.” 

Another big contention for existing users is the lack of support for wireless internet. Perlman says that using wireless connections is possible, but it adds a layer of complexity to the cloud service that the company cannot currently handle. He apologized, but said that in the end it was the smartest move OnLive could make.

“It turned out to be a smart move. We have people not signing up because we don't have Wi-Fi, and if they had there's no way we could have met the demand. We would have had to turn people away,” he said. “So waiting on Wi-Fi ended up putting a damper on growth that actually saved our butts. But what we are doing now is collecting statistics, we're helping diagnose problems in people's homes, and once we wrap our heads around that, we can open up Wi-Fi. By the fall, no worries, you'll be able to connect with Wi-Fi.”

On the future of the service, Perlman says the next step is determining if 1080p streaming is feasible from a business standpoint. “We have beta users now that are running at 1080p. It works fine, it looks great, but it is a question of deciding when we have an adequate level of support.”

Latching on to the zeitgeist, Perlman explains that 3D support is already built-in though they lack the 3D content at the moment. Motion control is also supported, but will require some manufacturer creating a motion controller that uses a USB port.

Perlman finished by letting gamers known the MicroConsole was still in the cards, but the business model still needed some work. 

“We have not settled on the business model yet for it. It is far less expensive to make than a console, but we are looking into potentially bundling it into other packages. Once we have a better idea about usage patterns on the PC/Mac OnLive service, we'll be able to make an informed decision on how best to price it. Needless to say, we want to get it out as inexpensively as we can,” he concluded.

M.H. Williams has been writing in some form or another for ten years and has been a hardcore gamer since the NES first graced American shores.  You can catch him on Twitter as @AutomaticZen, Google+ as himself, or on his personal Facebook page.