OnLive problems mean cloud gaming still far off

20 Aug

Streaming games to your TV without a console? Not for some time.

The world of cloud gaming took a big hit over the weekend as word broke that OnLive, the California company that is trying to position itself as the Netflix of video games, was pretty much going out of business. The story evolved over the weekend and it now looks like the company was performing some maneuvers to avoid exactly that fate.

According to the San Jose Mercury News, all the employees were fired and all previous stakeholders including founder Steve Perlman lost their stakes in the company. A newly formed company then acquired all of OnLive’s assets and will continue to operate under its name and run its services. Half of the employees will be rehired.

This restructuring – an Assignment for the Benefit of Creditors, or ABC – is a complex set of gymnastics to basically avoid going under completely. OnLive now has a new sole investor, venture capital company Lauder Partners, and says it will announce additional investors soon.

As the dust settles, one thing is clear. If OnLive’s new investors are interested in anything beyond its patents – such as seeing the company indeed become the Netflix of video games – they’re nuts. That’s because cloud gaming is still a long ways off, at least in North America. If it wasn’t, OnLive wouldn’t have found itself in such dire straits.

Video streaming providers such as Netflix have already had a tough go of it in both the United States and Canada. That company, which sells a service that competes with the TV shows and movies offered by cable internet providers, is one of the main reasons for the existence of download caps in both countries. Who can forget the warm welcome Netflix got in Canada, in the form of certain internet providers instantly lowering their customers’ monthly download limits when the company announced its northward expansion?

Cloud gaming, where players don’t get their games on discs but rather stream them live to their TV over broadband, requires internet connections that are not only much more robust than they currently are in North America, but also much beefier data caps. According to reports, OnLive’s games require at least five megabits a second of dedicated bandwidth for high-definition quality and chew up about three gigabytes of monthly usage per hour.

The recently released game Sleeping Dogs took me about 20 hours to finish, so that’s about 60 GB, or close to what most big Canadian ISPs give customers per month. And that’s just one game, with no other usage of the internet included. The situation is obviously better in the United States, where monthly plans typically run into hundreds of monthly gigabytes, but cloud games there would still eat into those dramatically.

Services such as OnLive don’t just require generous monthly usage limits – they also need fast, high-quality connections, which is why cloud gaming is far more likely to take off first in other parts of the world, like say, Japan. Sony has indeed made some recent moves to prepare for this eventuality, first by acquiring cloud gaming provider Gaikai – despite its Japanese name, the company is also based in California – and Japanese broadband provider So-Net.

Japan’s broadband infrastructure is much more suitable to bandwidth-intensive services such as cloud gaming, as the quick comparison with the United States and Canada on Ookla’s Net Index shows:

  • Average download: Japan 28.8 megabits per second, U.S. 14.75 Mbps, Canada 13.64 Mbps.
  • Average upload: Japan 14.66 Mbps, U.S. 3.84 Mbps, Canada 2.22 Mbps.

How about caps? Yes, Japan has those too, but they’re shocking in comparison. Providers don’t limit downloads at all, but they do cap users at 30 GB of uploading per day. That’s right. Per day. So again, how is cloud gaming going to happen in North America?

Here in the land of disc-gaming, players are going to be stuck with broken game consoles that need to be updated with new patches, fixes and firmware every day while, as usual, the future will arrive first in Japan.


Posted by on August 20, 2012 in internet, netflix, sony, video games


4 responses to “OnLive problems mean cloud gaming still far off

  1. Marc Venot

    August 20, 2012 at 2:11 pm

    One of the key factors is the datacenter. Actually in North America they are situated mostly in North Carolina and Oregon, but for its less expansive electricity Quebec and lot of oilsand Alberta, both with cold climate should have a larger share.

  2. John Kiser

    August 25, 2012 at 11:21 pm

    Well the main dilemma with cloud gaming and cloud computing as a whole is that its reliant on an always on streaming solution relying on video, for HD video this can run 1 – 2 gigs per hour depending how high a resolution is allowed. Given speeds and bandwidth caps and lack of data centers spread into key points for each area of operation it was somewhat doomed from the get go in the US and Canada….

    This service could do well in most European and japan/china in all likelihood… Just the US is a ways off before cloud anything becomes a mainstream thing and that is quite sad. If we had the infrastructure that was promised back in 96 for the early 2000’s we’d be rolling at 20/20 almost nationwide at this point (the telecoms are still given tax money and tax breaks for this proposed promise and its disturbing…) Sadly they don’t invest in their networks and infrastructures and here we are now with services like this going to die as they pop up.

    • petenowak2000

      August 26, 2012 at 11:42 am

      Well said, John.

      • John Kiser

        August 26, 2012 at 4:09 pm

        i do hope that one day the telecoms and ISP’ get a wake up call from our government. Sadly people keep pushing for less and less government involvement and we could end up with a situation where this gets even worse if Internet service were completely deregulated… Electricity in my state is a fine example of what deregulation can do. The state chose to end deregulation of the power companies (we only have one really in PA, even though “choices” popped up after its still from them just at a discount for a year or so…) and prices were set to go up 15% over a 2 – 3 year period without them having to really invest in newer infrastructure etc.

        The thing that really irks me is these companies telecoms, power companies, isp, etc all get tax payer money as subsidies and then get paid for for their services on top of it and are given tax breaks and still we see raises in rates… Which i wouldn’t mind if they raised them a little now and then if they actually improved things.

        My ISP is RCN a small Cable Company that offers television, internet, and voip phone services (as well a business services) and they have upgraded their network massively, they have no data caps, they do not throttle and they offer speeds starting at 25/2 for 50-55 a month all the way up to 75/10 for 85 – 90 at most (and you can get slightly lower your first year then those rates go up a little year 2 – 3 but not much and their service is reliable and they let you re-up into new deals often..)

        Now… if a smaller provider without nearly as much money as verizon, comcast, Time warner, AT&T and all can do this why is it the big guys can’t? It’s all about them scraping in record profits with diminishing service over time then charging more for higher caps later on so they can profit even further. Sadly we have an FCC and all that don’t quite get the whole tech thing and we end up in this situation over and over. Rather than keeping these companies to their promises we are now looking at a “small” plan which they still claim is too hard for them to do which is utter hogwash, they just don’t want to spend the money to lay out new line.

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