Game streaming is the future, so why OnLive is the past?
I was, as many others, quite shocked by the last news on OnLive.
When it was first announced I was shocked that such a technical achievement was accomplished and I was waiting so long for having it available in the country I'm living (Ireland)
Yet, it's business model failed, and you wonder how is that possible, this man saw the future!
I am the type of customer onLive was targeted to,
and this helped me realize why it failed.
He indeed saw the future, but many of us failed to see that it was a merely technical future, not the future of the gaming business model. I'm mildly interested in gaming, I like games, but I don't have a TV, so I don't have a console, I have a 2006 MacBook that until OnLive came was no use for heavy gaming, basically I am the type of customer onLive was targeted to, and this helped me realize why it failed.
OnLive cannot have a selection of games
that appeal all gamers
People like me like games, but not enough to invest in a console and not enough to invest in a gaming machine, and turns out in the end that after all I'm not ready to invest in OnLive subscription as well, but this is because OnLive cannot have a selection of games that appeal all gamers, because the gaming market is dominated by a complicated licensing system, somewhat similar to the film industry.
Don't get me wrong, I'm a gamer, I loved Half Life for instance and I'm a Steam customer, and I was able to play the first episode of Half Life 2 on my old macbook, but I cannot ask him to run Episode 2, but guess what, Half Life is not available on OnLive.
The game industry it's like a mashup between the film industry and the mobile phone market
What is not working here is that games publishers invest to develop games for the current market, made by a variety of incompatible hardware, they license their games to Nintendo, Sony, Microsoft… and they loose control on their product, they cannot just give their games away to OnLive to reach those customers, like me, that would love to play that game, but not enough to go out and buy the console it's running on.
The game industry it's like a mashup between the film industry and the mobile phone market, in the sense that as with the film industry a complicated license scheme govern the buy-sell process and like the mobile phone market games producers are not reaching directly their customers. You can imagine Nintendo, Sony and Microsoft as a cellular carrier that has a strong power on game distribution, they invest million of $ to produce HW and license games on it, they are locking in customer on their hardware and they feed trough the content you buy for it.
you cannot compete with the "game carriers"
So on all this which role can play OnLive? Becomes clear that they will never be able to obtain a omni-comprehensive catalog of games, technically they can let you play any game on any hardware, and this can appeal at some degree to game publishers, their interest is to monetize the game, but they are locked-in by publishing contracts with the console producers who are the well known revenue source for game publishers.
That's how GAIKAI win, identifying that the "game carriers" may be interested in offer game streaming, so that they can lower down the hardware specs, smash down the prices and increase their customers base, but still they want to be in control of the content, you can't be the streaming game service and licensing partner, you cannot compete with the "game carriers"
The future of games is the streaming, but this is not the future of the gaming business model, the future on gaming business is still in the hands of Sony, Nintendo and Microsoft.