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Last updated on April 23, 2014 at 13:36 EDT

Startup Could Make Video Game Consoles Obsolete

March 25, 2009

Startup firm OnLive Inc. says it has developed technology to deliver video games on demand, something that has the potential to ultimately make consoles obsolete.

Founded by technology entrepreneur Steve Perlman, the Palo Alto-based company unveiled the new technology Tuesday night at the Game Developers Conference in San Francisco.

After seven years of development, OnLive says its technology allows the streaming of video games without any detectable lags.

The new service represents a breakthrough, since unlike movies and music that can be compressed, video games are interactive and require instant responses.   Until now, this interactive nature has necessitated consoles with hefty computing power, such as Microsoft’s Xbox or Sony’s PlayStation, or PCs that could process some of the data that allowed the games to run.

But OnLive’s technology circumvents that limitation with a new type of compression that allows its game servers to communicate with players in real time over a broadband connection. Furthermore, OnLive’s service can also work on older PCs, even those without a graphics processing unit that has until now been a critical gaming component.

Through a small “MicroConsole”, OnLive’s service will also be available for use on television sets.

In a recent demonstration, OnLive touted its “Crysis,” a complex shooter game currently available only for PCs, played on a TV set through the small “console” and on a Mac laptop computer.

“It’s the last console you’ll need,” Perlman told the Associated Press.

Perlman, a former principal scientist at Apple, co-founded WebTV in 1995.  The company, which helped bring Internet access to TV sets, was later sold to Microsoft Corp. for more than $500 million.

OnLive says it would be hard for its users to exceed the monthly bandwidth limits that Internet service providers are increasingly setting for their subscribers.  For instance, a typical user would have to play nearly 12 full days, or about 284 hours, to reach Comcast Corp.’s 250-gigabyte limit.   Most gamers play about 60 hours per month, according to estimates by the Nielsen Co. 

OnLive plans to launch its service late in 2009, although the company did not disclose monthly service fees.  Most leading game publishers, such as Interactive Software Inc., Electronic Arts Inc. and Eidos Interactive Ltd., have enlisted, and their games will be made available on the service at the same time they are released in stores, OnLive said.

The company’s investors include Time Warner Inc.’s Warner Bros., Maverick Capital and Autodesk Inc. 

If OnLive becomes as successful as supporters believe, it could give retailers like GameStop Corp. as run for the money, just as waning digital music sales are causing record stores to shut down. 

OnLive was just the second major technology relying on digital delivery announced at the Game Developers Conference.   A lowcost video game console for emerging economies, called the Zeebo, was also unveiled.  The console downloads its games wirelessly instead of using disks.

“Retailers have a day of reckoning coming, and that’s digital distribution,” IDC video games analyst Billy Pidgeon told the AP.

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Startup Could Make Video Game Consoles Obsolete