Last week the gaming industry received news that cloud gaming service, OnLive, fired all of its employees and was bought out by a mysterious investor. Today we know exactly what happened to OnLive and the struggles they faced leading up to their dramatic sale.
OnLive was apparently facing huge financial troubles to the point where they had to consider declaring bankruptcy. The Wall Street Journal reports OnLive chose to use Assignment for the Benefit of Creditors (ABC), which is an alternative process to bankruptcy that allows companies to sell off their assets quickly.
It was then revealed that Gary Lauder of Laudner Partners was the one who bought up all of OnLive’s assets for an undisclosed amount of money. What this means is that OnLive’s service will continue without interruption. As of the writing of this article, OnLive’s services are still fully functional and customer’s games are still working. It remains to be seen how OnLive will rebirth itself and avoid falling into bankruptcy again.
Why did OnLive fail? It was simply ahead of its time.
The concept of OnLive is brilliant. It is a service that allows users to connect to their servers to play PC games on any platform and on any device. OnLive basically has powerful computers rendering games and feeding a video stream to players around the world. This is a godsend to those with slower computers as OnLive allows users to play games with gorgeous graphics, as long as they have a broadband connection (more on that later).
OnLive’s concept of terminal computing and gaming is where the industry is heading. Just look at Google’s Chromebooks and Chrome OS. Users have a dummy machine that relies on “the cloud” to access their files and information. If a user’s machine gets lost or destroyed, all the data is still kept on Google’s servers and users will be able to pick up where they left off once they get another Chromebook.
Sony Corp. announced in early July that it purchased Gaikai Inc., a major competitor to OnLive. Sony is preparing for a future where hardware is less relevant, and where games can be served up on any platform on any device. Games are, of course, the bread and butter of any gaming company as they sell their consoles at a loss.
So why did OnLive fall in to bankruptcy? One of the biggest reasons is that there just isn’t an infrastructure to support terminal gaming. OnLive requires a 1.5-2 Mbps connection to achieve the best results. Broadband penetration within the United States is struggling and a majority of internet connections will not meet OnLive’s requirements. Households today require more and more bandwidth as internet TV and cloud back up services become more prevalent but we’re just not there yet.
OnLive also struggled with creating a compelling game library. For $9.99 a month, players have access to hundreds of older game titles, but newer games would cost more. Many titles are not available on OnLive so gamers would have to look elsewhere to get the titles they want. OnLive simply struggled to get developers to buy into their service.
Another thing that OnLive, and all cloud services for that matter, has to combat is peoples’ trust in the cloud. Consumers really have to put their faith in a company to store their personal information and to trust that their service isn’t just going to disappear. Now with OnLive’s messy rebirth, it will have to fight even harder to gain the trust of users who are afraid that the games they’ve invested in won’t just disappear if their service fall into bankruptcy again. OnLive doesn’t let you download a local copy of a game so users can’t even create their own backup.
Although OnLive’s vision of terminal gaming is the future, it comes at a huge price. Running servers cost tons of money but OnLive has to invest in powerful computers that can run games and run them well. Then there’s the cost of providing a huge pipe that would support streaming large amounts of data to players. Any type of lag would make a game utterly unplayable so ping times have to be super low. OnLive also impressed by getting themselves on every platform. Development for PC, Mac, and mobile applications don’t come cheap.
It’s a shame that OnLive is now stuck in limbo trying to reinvent itself. Its technology, ideas, and implementation were all great but many factors are working against them. OnLive has the right vision for the future but doesn’t know how to implement it in the present.
