Is OnLive the future of the video game industry?

March 25, 2009

A company called OnLive have announced a new product. The idea is simple to understand: instead of buying a gaming PC or expensive console, they’ll render all the graphics for you on a server farm, send the video to a lightweight decoder box or software client via the Internet, and have it send back your controller input.

Basically, you’ll be playing games on a remote system via the net. Think of it as video games over VNC. The benefit is that you can play leading edge games like Crysis on dirt cheap hardware–supposedly.

A lot of people are skeptical about this supposed product, pointing out that US Internet infrastructure is pretty low bandwidth compared to other countries. Yet bandwidth isn’t the big problem; latency is the problem. (As Stuart Cheshire put it, “It’s the latency, stupid“.)

My typical ping times to a major Internet site are under 100ms–e.g. 25ms to hit Yahoo’s edge–but I’m one of the lucky ones with a good Internet connection. It’s not uncommon to have 250ms ping times. But let’s assume up to 100ms one way, and think about how this will work.

The OnLive hardware cloud will render the video. State of the art for low latency video encoding and decoding is 70ms or so for an encode/decode cycle. So the image gets to you after 100 + 70 = 170ms. You respond by moving the controller. Assuming no delay at all in reading the controller, your response gets back to the server after 270ms.

So basically, using today’s technology you’re talking over a quarter second of lag between something happening in the game and your being able to respond to it. And that’s a pretty optimistic case; note that the state-of-the-art HD video system I linked to had 500ms total latency in their demo across the public Internet.

Online video games use all kinds of tricks in order to stay responsive in spite of network lag. Even so, ping times can vary from minute to minute; the Internet offers no guarantees. When the net slows down, you tend to see bursty updates to other players’ positions, and fast gameplay gets frustrating. Some people have even taken advantage of this behavior, building “lag switches” which fool their copy of the game into thinking the network is lagging, allowing them to shoot you while you’re motionless (to them). They then turn off the lag, at which stage the game reconciles the conflicting opinions of the different players’ systems, often by killing you unfairly.

I note from the announcement that OnLive’s demos so far have shown a game being played across 5 miles of network. Their actual data centers will be up to 1,000 miles away from you, they say. I think I’ll wait until they try the thousand mile round trip before I believe it’s a real product.

OnLive say that their hardware encodes the video with only 1ms of lag. I guess that’s possible, if you throw enough expensive hardware at the problem–which brings me to the second problem: economics.

OnLive are floating the idea that it’ll be $50 a year for the service.

Now of course, they can share hardware and network costs between multiple users. However, their ability to do that is going to be severely limited by the requirement for low latency. They’ll only be able to time share my hardware node with other people in the same geographical area as me, and chances are most of us are going to be wanting to play video games at about the same times of day. I doubt they’ll be able to get better than about 4 or 5 customers per node on average.

They’ll also need much more expensive hardware than a typical web host. Gaming PC hardware is pretty high end, and low latency real time HD video encoders don’t come cheap. They’ll need a much more expensive network connection too–low latency will require the kind of multiple peering backbone connections that Yahoo and Google use, not the piece of copper your average web host uses.

Support costs will be higher too. They’ll need to hand-hold people through fixing latency problems, possibly intervening with their ISPs.

So they need much more expensive hardware, much more expensive network connections, will have higher support costs, and they’ll be able to support fewer users per hardware node. Yet they think they’ll be able to cover all that for $50 a year? The price of cheap, shoddy web hosting from GoDaddy? I don’t see any way that price is workable.

In summary: I could be wrong, but I think this OnLive thing is going to be vaporware.

Of course, you could do something like OnLive if you restricted yourself to games where latency isn’t an issue and the graphics aren’t tough to compress quickly. But then, you can play games like that on a $250 Wii console, or even a $99 PlayStation 2. So where’s the market?

Final thought: Even multiplayer online games like World of Warcraft ship with DVDs full of content to cache and render on the client. If this “video games via streaming video” idea was really a good one, wouldn’t people be doing it already?

Update 2009-03-30:
EuroGamer seems to agree

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