There has been a lot of talk on Cloud based gaming. With Fusion Render Cloud and the most publicised OnLive there has been a lot of talk about the future of the video game industry in terms of hardware development and retail.

For those of you who are not aware of Cloud based gaming is it is the ability to stream video games on to your computer without having to download the game and, most importantly, the lack of hardware to play them. That's right, your five year old Mac can play Crysis through the internet in medium or better settings.

What's happening is that with a minimum of a two megabyte connection you'll be streaming games on medium quality, and a five megabyte connection streaming with high quality for OnLive. OnLive does this through its development of new compression technology its been developing in secret for a good seven years. The servers (normal computers but with powerful Nvidia hardware) are computing the information and then streams back the result (image) on to your screen. The compromise? You just have to download a one megabyte plugin to your web-browser or buy a small peripheral for your TV if it takes your fancy.

What you do is you rent a game or you can try it out. You never "own" the game and if the library changes and they remove the game from its list then it becomes unavailable. You can also record several seconds of your game and post them and you can jump into other people's games and watch them play.

OnLive already has several developers and publishers backing it: EA, Ubisoft, Warner Bros, TakeTwo, Eidos and Atari have been confirmed, with Epic in a partnership deal to use the Unreal Engine 3.

The announcement of OnLive has forced Shiny Entertainment's founder David Perry, who was working on a similiar concept called Gaikai, to reveal his work. Not only that, but the announcement of OnLive quickly got Sony to patent their own Cloud based computing called "PS Cloud", with Microsoft developing into it for the future of Windows and Office.

OnLive is due to go into Beta this winter and is available in the United States as of this time. The price plan of this is yet to have been announced. Over the years the hardware will be upgraded to meet the demands of that generation's computer gaming.

At this moment, I see the biggest competition is AMD's Fusion Cloud, which EA is also involed with. When OnLive showed off it's power in a live audience it looked pretty good. Keep in mind though that the server was fifty miles away from the convention from which the game was being streamed from, with no doubt fast internet wired throughout the complex.

Thing is, I have my doubts. Don't get me wrong, it's a brilliant concept. The idea of playing games on old hardware without the need of upgrading is a tentalising thought, but I believe there are problems with the implementation.

1. Price plan: If it becomes too expensive for people to use then the business aspect will fall, along with the rest of OnLive. If it costs roughly the amount of three or four current-gen console games a year then I can see that the business aspect becoming a success.

2. Capacity: Steve Perlman (CEO of OnLive) says that their compression technology "has just one milisecond latency - basically no latency". That may be the case, but with the various servers set up all around the country, where users may be several hundred miles away from the nearest server (very much different from fifty mile difference in the showcase) while the servers are all computing possibly thousands of different users' information at once there will be problems. It's one thing streaming television on your PC and have it stop for one second, but having it stop while playing Burnout will ruin the fun and magic of gaming.

3. Lag: No matter what, whether the information is being handled on your own PC or a PC from OnLive, there will always be lag. Having information being sent to the server, computed, and then sent back to you and then having the result displayed on the screen will only add to that lag. That's what my Graphics Lecturer said, and he has a PhD in Video Game Networking, and I believe he's dead right. Assuming the compression technology lives up to the CEO of OnLive's standards you still have to take into account of the ISPs connections. We may sign up to a two megabyte internet connection, the minimum needed to use OnLive, but we may only get five-hundred kilobytes out of it at the best of times.

4. Consumer & Human Psychology: As Nintendo analyst Sean Malstron puts it, "Gamers like to own their games. That's why the market has rejected any model where the game is not allowed to be owned. DRM is routinely rejected..." I think he's right. As a Consumer society we like to consume, and have a product or service to show for it. When we play a game on OnLive, we don't own it. It is through their wisdom to keep the game available or not. This means that games that we may enjoy for years to come may not be available for us after a year releasing the game on the system.

What about the multiplayer aspect of gaming? That will only put more strain to the internet connection and rendering the image on to screen within a minimum of 30 frames-per-second.

I personally think that if this is too succeed then OnLive, and other Cloud based game services, must have a robust business model and have a sound technical execution to follow the service. Even if all the boxes are checked then we fall to the ISPs. With the internet connection available in the States and the current situation it is in I don't think that it can meet the simple mass consumer market. Maybe in a few years when the ISPs can deliver such internet speeds, but by then the OnLive business might go bankrupt. By then the concept idea of OnLive will live on, and it will most likely be not the last time we hear of Cloud based gaming.

If this is to work out, then we have to look at the side effects. If this becomes a success in the mass market then retailers would lose out on a huge profit margin, with other niche hardware manufactuers for the PC losing business as well. Nvidia gets to profit and still advance its technology because it's their hardware powering OnLive. Also, if this is released first in the market with a monopoly of one year then it will be too late for AMD's Fusion Reactor to combat it unless it has an extremly good business and technical model to be competitave.

What's your thoughts on all this? Do you think that this is going to fail or not? Personally I'm going to side my Graphics Lecturer on this one. Great concept, but OnLive will ultimately fail when released to the market.