OnLive, the game streaming service that was poised to usher in a whole new era of interactive entertainment, is in serious trouble. Two days ago, rumours began that stated the service may be shutting down. Shortly afterwards, reports started surfacing that confirmed its entire work force was being laid off at the end of the day. Rather than close entirely though, it seems that ownership of the company has passed into new hands and, at least for now, service will continue as normal. So what happened?
OnLive seemed like a miracle of the technological age when it was announced in 2009. Promising to deliver high quality, HD games to low-powered computers and set-top boxes, it gained much interest and plenty of criticism. Some said that our current infrastructure was too slow and unreliable to support real-time video game streaming without serious latency. While some still say this is true, many people were surprised and delighted to try the service for the first time and find out it actually worked.
I was among the many hopeful skeptics, signing up for OnLive early on and holding my breath as it fired up for the first time. It truly is amazing to play high-budget, full retail games on low-powered netbooks and, more recently, phones and tablets. Believe me - playing Arkham City on a device that fits in your pocket creates a strange disconnect in the mind. The OnLive Microconsole is another great part of the service, as it delivers the whole experience to your TV, with a controller not unlike those found on the Xbox 360 and PS3.
I think we all noticed something, though: Apart from the occasional release of a brand-new game, many of the titles available were from many months, or even years, back. It started to seem like a nice back-catalogue, allowing players to experience titles they may have missed from the past few years, but hardy a way to keep up-to-date with current games. The library also seemed to build very slowly, with no more than a few new titles every week, despite decades of PC games to catch up on.
There was definitely a Catch-22 situation going on: People wouldn’t flock to the service until big-budget, modern titles started getting regular release on it, but how could OnLive justify securing all these expensive games if people weren’t using the service? While the technology proved that HD game-streaming was certainly possible, the lack of enticing content kept it from entering the mainstream in the capacity needed to grow properly. In recent months, it seemed that OnLive was simply treading water.
That brings us to two days ago. A surprise staff meeting within the company had employees excited - had they finally been acquired by a major business that could push them to the next level? When CEO Steve Perlman took to the stage, he sadly informed his colleagues that at the end of the day, none of them had jobs anymore and their stock options were now worthless. The company had passed into the hands of an unknown “wealthy venture capitalist”, who may rehire a small number of them but wasn’t prepared to take on the whole crew.
ABC is the legal term for OnLive’s current state of affairs, and this stands for Assignment for the Benefit of Creditors. It’s a form of bankruptcy in which another entity takes over the assets of the current company. This means that that OnLive will continue to operate while in debt to creditors, but there is no guarantee that service will resume once things have been paid off. Thankfully, the new owner is apparently quite interested in the future of the streaming service, so who knows what his plans may be?
What does this all mean? Until the new owner makes his intentions known, we can only guess. One possibility is that OnLive will continue to run until its investors are happy, then shut down its servers and leave fans unable to play the games they bought. Another possibility is that the new owner will take OnLive and bring it to the level it deserves to be at. This will take a substantial investment, but could lead to a huge payoff as cloud-based services become more and more popular.
We should also think about Gaikai, OnLive’s only competitor in the cloud-gaming space. Gaikai haven’t really made an impact on the gaming scene, but after their recent acquisition by Sony, people are wondering what’s to become of them. There is speculation that cloud gaming may be a large part of Sony’s upcoming consoles, but this idea is not welcomed by all. The need for a constant internet connection, along with bandwidth and usage caps, is a roadblock that definitely needs to be passed before reality can catch up with the dream.
We seem to be at a turning point in video game technology, but it’s unclear how long things will take to evolve. The idea of games delivered to any screen, any time, is a massive leap forward, but maybe the world isn’t ready yet. I can’t wait to find out what’s planned for OnLive and Gaikai, but as it stands, the future of cloud gaming is up in the air.
