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Tuesday, March 24th, 2009

Disrupting Gaming: OnLive Makes "Good Enough" Look Great

The Internet has laid the foundation for a tremendous variety of disruptive innovations, enabling serious threats to everything from newspapers to brick-and-mortar stores to desktop word processors, but one segment has seemed to enjoy built-in protection from online disruption. Video games require relatively powerful hardware (in the form of fast computers or consoles), so games generally must be run on machines sitting next to the players. Sure, casual games can be hosted online, and games can even be purchased online, but the Internet just isn't good enough to stream the kinds of games that the Xbox 360 and PS3 can handle. Right?

Wrong: OnLive, a new company making its debut this week, is planning to offer streaming games that can be played by anyone on virtually any computer. This is a remarkable technical achievement, and it could usher in a powerful new business model that affects different incumbents in different ways.

On the one hand, game publishers like EA and Ubisoft are probably ecstatic. Owning the latest and greatest hardware necessary to play the latest and greatest games can be very expensive, and the high prices of gaming-oriented PCs prevent many people from even considering games with demanding system requirements. Making high-end games available to people with even low-end netbooks (as long as they have reasonably speedy Internet connections, which most people do) could greatly expand the market for their products. Unsurprisingly, quite a few of the big names in game development and publishing have already signed on.

On the other hand, hardware manufacturers are probably sweating bullets. OnLive could be hugely threatening to console manufacturers like Microsoft, Sony, and Nintendo, and high-end PC manufacturers like Dell and HP (which acquired Alienware and Voodoo, respectively, just a few years ago to gain a stronger presence in this lucrative segment). Why buy a $3,000 computer when OnLive promises almost exactly the same experience with a $300 computer and a cable modem? Even that's more than you'll need to spend: OnLive plans to sell a "MicroConsole" for less than $250.

"Good enough" technologies on the Internet have gotten better and better, from those prehistoric "newspapers by computer" to movie rentals and streaming video. As technology continues to improve and broadband becomes available to more and more people, who knows what will be disrupted next?


Posted by in Disruptive Innovation | Internet | Comments (1)

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From: Alain Breillatt
Posted: Tuesday, March 31st, 2009 - 2:29 pm EDT

Andrew, some great thoughts and they mirror my exact reaction when I came across the OnLine announcement. I'm not a heavy gamer though I once upon a time was and I wondered what the gaming community's reaction would be. So I took up an informal poll of some gamers I know and here's what they said:

They see two problems with it just from the start. The first is obviously the connection. They pay $50 - 100 and change right now for high speed cable or FIOS internet. Most have mid-speed internet due to wanting to play WoW or similar online games either from PC or console. Granted, the general community can't afford to maintain a top of the line system consistently if they are PC users, but most have something that is decently powerful with regards to CPU, hard drive, and especially GPU. But here's the thing... when they have lag issues with WoW, or even the internet in general it's not due to the CPU, GPU, or anything hardware related. It has to do with the fact that they're sharing a cable connection with how many hundreds of users in the same area, plus they have a provider that is quite obviously giving them a lower connection speed than what they advertise... because they can. Their connection hiccups and there isn't much they can do about it. Add in the bandwidth cap that has been discussed and they see several hurdles to overcome - none of which are driven by the hardware and all of which could be exacerbated by a streamed offering.

The 2nd issue has to do with modifications and outside development in support of the gaming community. If the gamer no longer has a hard copy of the game, they can no longer create. Valve and Half-Life are the perfect example here. Where would Valve be if it hadn't been for that little modified thing we call Counter Strike? They even admit that the Counter Strike modification is one of the most important things that happened to them and really put them on the map.

WoW is addressing this by copying add-ons the community created and making them part of the core game. This has really helped make WoW a much better game. But the fact stands that outside programmers and developers created the modifications first.

So many more questions come to mind, but those are the primary two.

My personal skepticism as well doesn't mean I didn't geek out a bit. Far from it. I think the idea is fresh, quite possibly the future, and very cool. But it makes me cock my eyebrow a bit and wonder what the gaming community might lose if they decide to go this route.