I think these concerns are valid in theory, but in practice, for OnLive, they're a little overblown. For one thing, OnLive has wisely dropped the $5-a-month access fee. It is true that in getting a game over the Internet, you are sacrificing some rights you held over physical media—you can't sell OnLive games after you're done with them, for example, and you can't loan them to a friend. But OnLive offers a few advantages too. For one thing, title for title, OnLive games tend to be cheaper than their counterparts on traditional consoles. (For instance, the Wii, Xbox 360, and PS3 versions of Shaun White Skateboard sell for around $50, while the OnLive full pass sells for $30.) Plus, the OnLive game is cross-platform—it works on Windows, Macs, and the MicroConsole. Starting next year, the company will begin offering OnLive in select TVs.
I asked Steve Perlman, OnLive's founder, about the fears that games will "expire" after three years. He dismissed them: "It's my goal that 10 years from now you'll be able to play every game that we had at launch," Perlman said. But his lawyers won't let him officially say that. Over the next 10 years, the tech world will change radically—servers, network equipment, displays, game development, and all the other ingredients will continue to advance, so it's impossible to promise anything. (No game platform is future-proof; you can buy a mint-condition Super Nintendo on eBay, but good luck connecting it to your HDTV.)
The other worry about OnLive is whether it can scale. If it really does offer many advantages over traditional gaming, and millions of people flock to it, will it be able to handle that demand? Perlman says the service has seen a huge rise in interest since it launched last year and hasn't suffered any major outages. He also argues that cloud gaming is inherently more efficient than console gaming. Depending on which games people are playing at any particular moment, OnLive can dedicate each server in its data center to several players at once; this means that it can operate more cheaply than console manufacturers, who often subsidize the cost of their hardware in order to gain market share.
There are other potential complications. Not everyone is very optimistic about the future of the American broadband market. What if people don't get super-fast connections, or what if more and more providers impose broadband caps? Earlier this month I worried that Netflix's streaming service might destroy the Internet. If it gets popular enough, could OnLive wreak havoc, too?
Nobody knows, but if that happens then you've got a lot more than OnLive to worry about. For now, there was only one thing I found annoying about OnLive's new console—it doesn't include a Wi-Fi chip, which means that if you don't have an Ethernet cable that can reach your TV, you've got to buy a wireless bridge—a small device that harnesses your wireless signal into a wired port. (You can get one for about $50.) Perlman says that a future version will carry Wi-Fi, but that the company wants to make sure the system is running well on wired Internet before it branches out into wireless. This sounds reasonable, but I worry that having to add a bridge will turn too many people away from what is otherwise the most convenient and flexible video game system on the market today.