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Why Onlive Died

By on August 22, 2012

I recently provided some analysis to the Guardian on the demise and rebirth of OnLive. They didn’t use all of the comments, so I thought I would post them here.

OnLive’s problem was that it failed to find a unique hook that would make consumers go “I have to own that service”.

They were pitching convenience: no more physical discs, no more downloads, just fast instant games, whenever you wanted them. The problem was that those fast instant games were games that you didn’t want. They were going up against Sony (with exclusive titles like Uncharted and Little Big Planet) and Microsoft (Halo,  Gears of War)and Nintendo (almost everything) and PC (World of Warcraft). They were going up against those platforms with no exclusive content.

Their marketing didn’t appeal to consumer’s rebellious nature, like PSOne, or lifestyle choices, like PS2. Instead it was: spend a monthly fee to get a whole bunch of games, but not modern ones, and not the ones your mates are playing. A rational message appealing to the logical brain, but without follow through.

Back in October 2010, I argued that Onlive was doomed because it had no compelling content, the equivalent to Rupert Murdoch securing the Premiership football rights that made BSkyB a must have service in many homes. The only equivalent content I could imagine was World of Warcraft, and that seemed likely to cost billions of dollars, if Activision Blizzard was even prepared to sell.

In the meantime, OnLive struggled on trying to create a flat fee subscription service, just when everyone who wanted AAA console gameplay already had PS3s and Xbox 360s, and those who didn’t had great gameplay at very cheap prices on their smartphones and tablets.

The only hope for OnLive, given that it failed to capture the public imagination, was to frighten the platform holders Microsoft and Sony into a sale. When Gaikai was bought by Sony, there was only one buyer left, and clearly they didn’t bite.

OnLive’s gamble was that it could scare a major technology business into a defensive, over-priced acquisition. It failed. OnLive (and more particularly their staff) are now paying the price.

And I believe that we will now see that cloud gaming (meaning streaming from expensive dedicated hardware centres, rather than some sort of browser-like technology) is a technology dead end.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: