OnLive Video Game System & Business Model Presentation to Columbia University

onlive logoIn this terrific presentation, Steve Perlman, OnLive’s founder, both demos the OnLive online, video-game system and discusses their business model. This is the most complete discussion of the OnLive system and business model I’ve seen yet – complete with a compelling demo of games being played  on a laptop, the OnLive micro console and on an iPhone. 

Part 1 – OnLive Company & System Background

In part 1, Perlman gives a basic introduction to the OnLive system, discusses his history with Apple and the technical limitations (compression/latency) that OnLive had to overcome to make their system work.

Part 2 – The OnLive Video Gaming System Demo’d

The system is demo’d on an Apple Laptop. You get a sense of the interface. Spectator mode is particularly compelling. Users will be able to watch whatever games their friends are currently playing. Users will also be able to watch the best players in the world playing each game. Gamers will also see how may people are watching their play.

Part 3 – Demo Continued on Micro-console and iPhone + Business Model

The demo moves to the micro-console and the iPhone. Members of the audience start playing. Perlman shows how you can watch what the other players are playing on their devices. He also demos how the compression algorithms work, with particular emphasis on graphics that are typically hard to do with video compression.

Perlman then discusses how and why the data centers are distributed throughout the U.S. and the need to be within 1,000 miles of the server.

He starts discussing the ‘Retail vs OnLive Economics’ slide that I discuss separately in my ‘Cost Components that Make up a Typical Video Game’s Retail Price’ post.

Part 4 – Business/Economic Model Followed by Q&A

The business/economics model discussion continue in part 4. This is one of the most interesting parts of the talk. The presentation formally ends and a Q&A begins. Questions get into a more technical discussion of how the system works. Of particular interest is a discussion of how OnLive’s compression algorithm works – how it is different from, say, TiVo’s or Apple TV’s compression algorithm. Less information needs to be transmitted because a video-game will never be ‘paused’.

Part 5 – Q&A Continues – Technology & Pricing is Discussed

More questions are answered. Perlman says there will be a base subscription fee to access the system (like the Xbox Live fee). Demos will be free. Publishers will be free to rent games for a limited time, allow users to play them a-la-carte, buy them outright or subscribe to them like WoW. Pricing will be up to each publisher on a game-by-game basis. The system support any pricing/revenue model.


All-in-all, a terrific, informative presentation.

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