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OnLive on Skeptics

VentureBeat has an article based on the widespread skepticism about the OnLive service unveiled at GDC, as pundits have expressed disbelief that cloud gaming is practical from technological and/or financial standpoints. They have feedback from a number of industry luminaries on the topic, most of whom say they are taking a wait-and-see approach. They also get a response from OnLive's Steve Perlman to speculation that OnLive will not be practical, here's a bit, which specifically addresses a recent editorial on Eurogamer:

Heís confusing compression latency (1ms) with frame time. The frame time is NOT 1ms (which would imply 1000 fps). Itís 16.7ms (which implies 60fps). Just as linear video compression time is much HIGHER latency than one frame time (e.g. 500ms latency does NOT imply a 2fps frame rate), interactive video compression is much LOWER latency that one frame time.

Regarding server costs, he does not understand server economics. It doesnít matter how many subscribers you have per server. It matters how much revenue you earn per server. Most web services are ad-supported and CPM-based and need to have thousands (if not millions) of users per server over the course of a month in order to pay for the server because they earn a tiny fraction of a cent per user.

OnLive servers earn many dollars per user each month (many orders of magnitude more than a CPM-based business), and when one user is offline, another user is online, so even a server that is only serving one user at a time (e.g. for Crysis), is reused by many users each month. The useful life of a server is probably around 3 years. so, if you amortize the cost of a server over 36 months, you quickly realize that on a monthly basis, the cost per server is very low. And lastly, the cost of a server is much less than a home gamer PC: we donít have the case, disk drive, optical drive, etc. And we donít have to worry about retail markup, customer service, etc. Long story short, the revenue per server per month is much higher than the cost of the server. It makes OnLive a very healthy business.

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60. Re: OnLive on Skeptics Apr 1, 2009, 12:13 Flatline
I love how you nay-sayers dog new technology mainly because it sounds stupid or too good to be true. Does it help you to think that way? Technology evolves. Accept it. 10 years ago when you heard that harddrives will have gigabytes of storage and will be as small as a fingernail someday, I'm sure the same narrowmindedness was present.

And just to put some gas on the fire, this is definitely a pc fanboy trait, hands down.

Once again, put your money where your mouth is. Let's see you invest in the company. After all, *none* of this will happen unless believers like you give them a lot of money to make it happen.

Or is it really a risk that you're not willing to take (or admit to)?
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