OnLive promises video games without the hardware

A new online video game distribution network hopes to free players from buying game discs or the console systems and high-priced computers needed to play them.

The OnLive Game Service, expected to launch later this year — and to be officially announced today at the Game Developers Conference in San Francisco — lets subscribers choose from a on-demand catalog of new video games that can be played on Windows and Apple Macintosh computers or television sets.

Bypassing current console systems such as the Microsoft Xbox that play only games made for that specific platform, OnLive lets computers play games stored on its network of super-powerful data servers. These servers bounce game data back and forth from the player's computer using proprietary compression technology to make the games run as if they are loaded on the computer.

To play over big-screen HDTVs, a small microconsole unit (the size of a deck of cards) that connects to home broadband networks is used. Game controllers and headsets can connect to the microconsole using USB or wireless connections.

As the first true virtual console, "OnLive shows the potential for a gaming world without consoles," says Michael Pachter of Wedbush Morgan Securities. However, he says, if the service costs too much, it runs the risk of being like TiVo's digital video recorder — among the first DVRs but priced too high for mass acceptance.

The price of the microconsole needed for TV-based connectivity and monthly subscriptions will be announced later. (Those interested in participating in the testing of the system can sign up on

Games such as Prince of Persia (Ubisoft), LEGO Batman (Warner) and Mirror's Edge (Electronic Arts) were among the 16 games to be shown as playable on the service. Supporting game publishers include Atari, Codemasters, Electronic Arts, Eidos, Epic Games, Take-Two Interactive Software, THQ, Ubisoft and Warner Bros. Interactive Entertainment. OnLive does not offer classic video games, but does plan to explore back catalog titles in the future.

"Were providing you with the latest high-end titles, the exact same ones you would see at Target or Best Buy, in the same release windows. But what is really cool is you don't need any high-end hardware to play them," says OnLive founder and chief operating officer Steve Perlman. "There's no physical media. It's an all-digital platform. You never need to upgrade your equipment at home."

Compared to choosing which console system to buy or making costly upgrades to computers, OnLive represents a paradigm shift in game delivery that consumers may embrace. "You've got choice, you've got value and your performance is always state-of-the-art and you're getting all the best games," says OnLive chief operating officer Mike McGarvey.

And the system also makes sense for publishers currently forced to create multiple versions of games to be played across various platforms, he says. "We offer tremendous economics for the publishers because we are getting rid of a lot of the inefficiencies of the packaged goods business," says McGarvey, who formerly was CEO of Eidos. "Really, video games is one of the last digital frontiers in which at least the majority are not delivered through digital means. "

OnLive users have an online profile that saves the games they have rented or purchased and tracks their progress. Users can peruse the service to watch other games in process and connect with friends or other users for multiplayer sessions. Players can save "brag clips" of their best performances; those learning a game could watch more experienced players. "This gives you the ability to think of video games as television," Perlman says. "Anything is viewable."

Computer users will download a 1 megabyte Web browser plug-in that allows them to shop for games and use their profile. Once the games launch, they fill the screen with full resolution video. High-speed connections (five megabits per second or greater) allow for TV-based players to get high-definition-quality video.

Perlman, who previously helped develop QuickTime, WebTV and Moxi, spun Palo Alto, Calif.-based OnLive out of technology incubator firm Rearden. The system has been in development for seven years, and includes as investors Warner Bros., Auto Desk and Maverick Capital.

His previous work on multimedia settop boxes led Perlman to think "these boxes are just going to get bigger and bigger. … There must be a way to upgrade (video games) to get people out of this horrible console cycle," he says.

If OnLive can establish itself as a reliable and easy to use service, it has the potential "to compete with console games as interactive entertainment, and could have a very positive impact on high end PC games publishing," says Billy Pidgeon of research firm IDC. "The service would be an anti-piracy solution and would enable quality game play experiences without the cost of a game console or high performance PC."