OnLive’s Cost Still Looks Like a Sticking Point

By  |  Thursday, March 11, 2010 at 6:15 pm

Now that OnLive has finally revealed some pricing details, the cloud gaming service is looking more than ever like a dubious proposition.

OnLive will cost $15 per month when it launches on June 17, but that price won’t let you play any full games. You’ll still have to rent or purchase games to stream to your computer in addition to the monthly charge, at prices that are still undisclosed. Even if it costs less to rent or play a game — and it probably will, given that OnLive promises lower distribution costs compared to retail — OnLive will have a tough time competing with actual hardware for all but the most dedicated gamers.

Let’s say you spend $300 on a new console every five years. That’s $5 per month, already less than a subscription to OnLive. Now, let’s say you buy one new game every two months, at $60 each (a very generous estimate given that average game ownership per console hovered around six games after 24 months in this generation ), you’re basically spending $35 every month. That means publishers have to charge $40 or less for a game through OnLive (which makes $70 every two months when you add in the subscription) to make the proposition worthwhile.

Even if publishers are willing to go that low, the consumer is making concessions. Yes, you get instant gratification and the ability to play anywhere, but you lose the ability to buy, trade or sell used games, and there’s no guarantee you’ll be able to play what you bought 10 years from now. If OnLive goes belly up, so does your entire game library. And I wonder, if you decide to stop playing games for a year or two (say, you’re raising a baby), can you recover your library when you’re ready to start playing again?

The prospect of game rentals raises more questions. How much will an OnLive rental cost and how long will it last? In other words, how long do you have to rent a game before it becomes more feasible to “buy” it? Will the amount you spent on the rental be credited towards the purchase price?

I’m still willing to give OnLive the benefit of the doubt that its technology will work (despite one rogue report), and that cloud gaming itself isn’t a bad idea. But on pricing alone it’s too early to call OnLive a console killer.

Article updated to fix calculations.

 
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9 Comments For This Post

  1. Anonymous Says:
    March 11th, 2010 at 8:09 pm

    My question is, what happens to the games you purchased when you decide you don’t want to subscribe anymore? Do they go up in smoke? Do you get a CD key you can use on a retail disc? At least when you cancel Xbox Live Gold you can still play your games in singleplayer and local multiplayer.

    I still like the Steam model better. Yes you have to wait for the games to install, but with a decent broadband connection it shouldn’t be too terrible for most games. You only have to buy your games once, but you can play them on whatever PC you want (provided it meets that game’s system requirements). Best of all, there’s no monthly subscription fee for the service. Yes, Steam won’t magically let your netbook play Aliens vs Predator, but you could play it on your home PC over the Internet using a VPN and remote desktop program.

  2. Anonymous Says:
    March 11th, 2010 at 9:39 pm

    If they don’t let you pause your subscription, I would be really surprised. In fact, it would be a stupid move on their part. After all once you pay for a license, the game is yours. Also, they better have some type of refund policy. If I don’t like the game, I should have 24 hours to un-buy it.

  3. Pratik Says:
    March 12th, 2010 at 3:06 am

    Jared, please get your calculations right!

    You said:

    “Let’s say you spend $300 on a new console every five years. That’s $5 per month…”

    Then you say:

    “Now, let’s say you buy one new game every two months, at $60 each (a very generous estimate given that average game ownership per console hovered around six games after 24 months in this generation ), your’e basically spending $65 every month.”

    This is obviously incorrect. If you buy ONE $60 game every TWO months, then that would be $30 per month, which, added to the cost you allocated to buying a $300 console once every five years, makes it $35/month.

    This obviously destroys your next sentence, which says:

    “That means publishers have to charge $50 or less for a game through OnLive to make the proposition worthwhile.”

    Please fix this all and make more valid conclusions, based on the model that you are proposing. This should be trivial stuff.

  4. Jared Says:
    March 12th, 2010 at 8:27 am

    @Pratik

    You’re right. I originally had one game per month in there, which seemed way too generous given the average game ownership per console, and neglected to update accordingly.

    A better way to do this would be to calculate how many games you’ll have to buy per year to make OnLive worthwhile, but that’s impossible to say until we know how much each game will cost.

    In any case, I updated the calculations and noted the correction. Apologies.

  5. Marc Says:
    March 12th, 2010 at 8:57 am

    It’s a nice idea… and I hope it works. Here in the UK at least, you’re lucky if you have a line speed greater than 3Mb/sec.

    I don’t think I will ever switch to a console or service that is digital only, since I buy most of my game discs second hand 2 or 3 months after release. Saves me lots of money(!).

  6. Pratik Says:
    March 12th, 2010 at 12:20 pm

    @Jared: Great work updating it so swiftly; I was just a little puzzled when I first read it through, and only spotted the mistake upon reading it again.

    I am intrigued to see what OnLive game pricing is like; as a guy who would buy console games after the curve (like Marc), i.e. not when they were just released, I’d get them a lot cheaper than £35-40, so I don’t think the service would be for me, but I could imagine it being useful for some people.

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    March 14th, 2010 at 8:34 am

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  8. Zach Khan Says:
    May 17th, 2010 at 8:43 pm

    You forgot to add the price of online subscription services (PS3 is free but the most popular system, 360 costs roughly $5/month for Gold service). I can see onlive being an attractive choice for PC gamers, but they still need to develop a killer app title for their platform. I would get it if the main service was free but we were omly charged for games and rentals.

  9. lol Says:
    December 6th, 2010 at 4:40 pm

    How would the online play be, if ANY? also how many people would REALLY buy this, and would all games work for this?

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