The rise and fall of OnLive

UPDATE 1/24/2019: We were recently contacted by Jane Anderson, OnLive's former communication lead, and said some of the previous reports about OnLive were incorrect. Anderson asked us to add the following to refute previous reports:

  • OnLive CEO Steve Perlman didn't sell the company off behind his employees' backs. In fact, when the OnLive staff lost their jobs Steve personally paid for their health insurance.
  • The decision to shut down OnLive was made entirely by the larger company seeking to acquire it, Steve had no say in the matter.
  • Steve also wasn't involved with the 2014 OnLive relaunch.
  • Mark Jung was made chairman of OnLive in 2014, not CEO.
  • Check out our recent interview with Steve Perlman

ORIGINAL PUBLISHED ARTICLE:

During the 2009 Game Developers Conference (known more colloquially as GDC), a new service called OnLive was announced. The service, which was part of a larger tech company of the same name, aimed to revolutionize the gaming industry by offering PC gamers a way to play the latest games without having to invest in a pricey high-end computer first. Roughly six years later, OnLive would be no more, though its legacy would live on thanks in part to the cloud gaming technology it helped to pioneer.

This is the story of how an incredibly ambitious idea-turned-failed experiment helped to pave the way for cloud-based gaming as we know it today while also proving that bigger doesn’t always mean better.

Humble Beginnings

OnLive began as a cloud virtualization technologies company that was founded in 2003. The company’s main goal was to make cloud-based technologies more readily accessible to the public, and the main way in which it wanted to do so was by creating a cloud-based gaming platform.

When the OnLive gaming service launched in June of 2010, it functioned in a manner similar to platforms like Steam or Uplay, with users able to purchase and play a wide selection of games on their PC. However, where OnLive differed was in the manner it allows users to play the games they purchased. Rather than having the game installed and rendered on the user’s home machine, the game was instead run from an OnLive server and then broadcasted to the player via cloud-based streaming.

Since the user didn’t have to install the game themselves, this means that OnLive could be used to play current, high-fidelity games on computers which couldn’t normally run them. The tradeoff was that a steady and strong internet connection was required to play any OnLive game, even a purely single-player one. However, for those who couldn’t afford or weren’t willing to shell out for an expensive gaming rig, OnLive was a welcome alternative…for a while.

Aggressive Expansion

Over the course of its lifespan, OnLive was made available for a broad range of different devices including both Windows and Mac computers, Android-based smartphones and tablets, gaming devices like the Nvidia Shield, and even media devices like the Amazon TV.

At launch, all OnLive users also had to pay a $14.95-per-month service fee in addition to whatever they paid for games, but by October of 2010 the service fee had been done away with. However, in December of 2010, OnLive also started offering an optional ‘PlayPack’ subscription which granted unlimited access to a selection of games and a 30 percent discount on OnLive merchandise for a monthly $9.99 fee.

In November of 2010, OnLive opened up pre-orders for what it called the OnLive Game System, a dedicated micro-console which could be hooked up to virtually any television set, allowing users to play OnLive games without the need for a computer.

The OnLive Game System came complete with a wireless controller and support for a wide range of peripherals including keyboards and mice, which meant that games normally confined to the PC gaming world could be played on a television set.

Initial impressions of the OnLive service as a whole were mostly positive, though users did note that the video quality and overall performance tended to fluctuate on a game-by-game basis. Still, the future looked bright for OnLive, and 2011 proved to be a mostly uneventful year, with the one exception being the service’s migration over to the U.K. in September of 2011. However, the folks at OnLive had some big plans for 2012 which would take them beyond the realm of gaming. Little did they know that those plans would herald their undoing.

Going Beyond Gaming

In January of 2012, during the annual Consumer Electronics Show (also known as CES), OnLive announced yet another new component to its service: OnLive Desktop. Similarly to the OnLive Game Service, OnLive Desktop was a subscription-based service which allowed tablet users to essentially turn their tablets into a cloud-based PC.

The service allowed full use of Windows programs like Microsoft Word, PowerPoint, and Excel. Also, since the user only had to install the OnLive Desktop app to utilize the entire virtual client, they could have what was essentially an entire second computer in the palm of their hands while taking up virtually no space on their tablet.

Trouble started brewing a few months later in March when Microsoft threatened legal action against OnLive. According to Microsoft, OnLive Desktop was in violation of the Windows 7 licensing agreement which forbade third-party companies from offering Windows 7 as a hosted client.

Microsoft also wasn’t happy with the fact that OnLive Desktop users could essentially gain access to paid Office services for free, though critics rightly pointed out that Microsoft hadn’t managed to port Office apps over to devices like the iPad on its own. By April of 2012, OnLive had switched the OnLive Desktop architecture over to Windows Server 2008, bringing it in line with the license compliance terms.

Sudden Death

In early August of 2012, OnLive laid off its entire staff. The move caught the press and the public by surprise since, by all accounts, OnLive was doing pretty well despite the minor kerfuffle with Microsoft. More details came to light over the following weeks, painting a bleak picture of a company that had been secretly hemorrhaging money for years and a CEO who chose to save himself at the expense of all those who worked under him.

Steve Perlman, OnLive’s CEO, had sold off OnLive’s assets to another company called Lauder Partners and, due to the specific circumstances of the closure and sale, OnLive’s former employees also lost their stock options and were denied severance pay.

According to former employees who spoke publicly following the mass firings, OnLive had struggled to find a large, dedicated userbase pretty much ever since its initial launch. That combined with the service’s inability to consistently offer in-demand games, the inconsistent network performance, and the fact that OnLive users were relegated to their own online ecosystem (thus making it hard to consistently find other players to play online games with) meant that, on average, the company was spending roughly $5 million a month without recouping any of those losses.

With Lauder Partners in charge, Steve Perlman was eventually let go and OnLive was re-launched in March of 2014 with a new CEO, Mark Jung, at the helm. Jung, one of the co-founders and the former CEO of the entertainment giant IGN, helped to guide OnLive during the launch of two brand new services, CloudLift (a game data syncing service) and OnLive Go (a service which allowed users to play select MMO titles on a mobile device). Roughly a year later though, in early April of 2015, OnLive sold most of its remaining assets to Sony, and the entire OnLive infrastructure was shut down for good on April 30.

    From The Ashes

    The technology that Sony acquired both from OnLive and its previous acquisition of another cloud gaming company, Gaikai, back in 2012 allowed it to create its very own cloud gaming service, PlayStation Now.

    Currently, PlayStation Now allows users on the PlayStation 4 and PC to stream older PlayStation titles, and many of those users likely don’t even know that OnLive helped to pave the way for cloud gaming as we know it today. The story of OnLive may ultimately be a tragic one, but it’s also a story about how one company saw potential in the future of gaming and showed no fear in seizing it.