NOV. 19, 2010 • OnLive began taking pre-orders for its TV-compatible OnLive micro console unit. For $99, consumers receive one OnLive wireless controller plus a $50 credit. Earlier in the year the firm scrapped its $14.95 paid subscription model that forced user to pay just for the privilege to buy titles. New releases games can be purchased a la carte, but starting Jan.15 OnLive will put in place a $9.99 per month PlayPack subscription that gives users 24/7 access to 40 back catalog games. So the $50 credit can be seen as five months of free game play.
Impact: Just in time for the heights of the holiday shopping season, OnLive started airing ads on popular shows such as Comedy Central’s “The Daily Show” this December. This indicates OnLive believes it has a mass market service, possibly similar to how Internet enabled TV is getting a lot of attention. Judging by all the noise around Internet TV, it appears that it may be the big news at CES 2011, much like 3D TV was hyped at CES 2010. However, like 3D TV we do not think that OnLive has a truly mass market service at this point. The continuing business model updates signals that OnLive’s path to mass market numbers may be difficult given the consumer’s fondness for packaged goods games, not to mention the small number of available titles OnLive has available compared to the broader market. While the technology itself will continue to be a challenge, it does work better than many analysts had initially forecasted. We feel the long run opportunity for OnLive will come not only when the technology matures, but also when its selection of both new and catalog titles reaches critical mass.
