You may not have heard of Onlive, but it’s currently a big deal. What is Onlive? Cloud gaming. Services like Steam (of which I’m a big fan) already allow you to purchase games online and download them. Now imagine taking a low-end PC and running Crysis with no problem. That’s Onlive. The processing is done on their end. The image quality is controlled by your connection speed, much like when streaming movies from Netflix. 

Onlive is being seen as potential big competition for the big game consoles like XBox 360 and Playstation 3, but my guess is that it won’t be available until near the time of the XBox 720 and Playstation 4.

My first thought about Onlive is that I’d much rather own my games and be able to play them offline. Sure, I love Steam, but with Steam I’ve purchased and downloaded the games – the content is sitting on my machine and if my internet connection goes down, I can still play Far Cry 2 or Beyond Good and Evil.

But then I started thinking about things. Everyone’s primary concern here seems to be cost. What if they set this up as a service like Netflix, where you pay a flat rate for all services? Netflix remains profitable while charging under $20/month and providing the latest movies in Blu-Ray format. Buying all those discs and shipping them can’t be cheap. Could Onlive manage to be profitable while offering the same type of subscription model for games? If so, the comparison between traditional gameplay and Onlive might be analogous to buying television shows on DVD versus subscribing to cable.