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Take-Two Interactive Software Inc
BT Group PLC
To date, mobile gaming has been dominated by titles such as Angry Birds, where players perform a few simple tasks like firing a slingshot in a two-dimensional landscape. A couple of publishers are pushing the boundaries with simplified versions of console thrillers, such as Electronic Arts’s (ERTS)Dragon Age Legends. But those games remain limited because smartphones and tablets lack the robust graphics chips that power top-end consoles such as the Xbox 360 and PlayStation 3.
Gamers now have an option for playing high-end titles on their underpowered tablets and smartphones. Silicon Valley startup OnLive already runs a cloud gaming service, letting people play games on their TVs without an expensive console. All the heavy-duty graphics processing happens in OnLive’s data centers, which transmit the results over the Internet. Starting on Dec. 8, OnLive began offering the same service for mobile devices. People with iPhones, iPads, Android devices, and Amazon.com’s (AMZN) Kindle Fire will be able to play full-fledged console games over Wi-Fi and 3G/4G wireless networks. “I just had my kids in the back of the car on the way to Laguna Beach playing their games,” says Steve Perlman, the chief executive officer of OnLive. “We got to the beach where there are whales popping out now and again, and they said, ‘Just a minute, Dad.’ So there’s good and bad to this.”
With OnLive Mobile, people will download an app and then connect to the OnLive service. The games stream out of the company’s data centers, where a variety of crafty compression techniques are applied to squeeze the information through wireless pipes. OnLive sells a wireless controller that connects to mobile devices, letting people play as many as 150 games the same way they do on an Xbox or PlayStation. The company also has a USB adapter that lets gamers link four controllers and their audio headsets to the same device.
An additional 20 games have been refashioned for touchscreens, with more titles expected next year. Rockstar Games (TTWO), for instance, developed a special version of its hit L.A. Noire console game just for the OnLive Mobile service. Gamers play a detective in 1940s Los Angeles and use their fingers to guide the Philip Marlowe-like character while solving crimes, driving cars, shooting at bad guys, and ransacking homes. The mobile version includes the original’s Hollywood blockbuster-quality scenes, in which animated actors move the plot ahead. “For the life of me, I can’t remember a goddamn thing,” says one bloodied witness as he’s grilled by detectives. It’s the first mobile game to feature the type of cinematic experience that’s now de rigueur on consoles and powerful PCs.
L.A. Noire will cost about $50—an unheard-of price in app stores where most games go for a couple dollars. As Perlman concedes, “It remains to be seen” if people will adjust their mobile buying habits. Games will be sold à la carte, on a rental basis, and through OnLive’s $9.99-a-month subscription service that’s like Netflix (NFLX) for games. Perlman notes that OnLive subscribers who currently connect the service to their TVs will be able to play a game on their mobile device, pause it, and then pick up the action when they return to the set in the living room.
OnLive’s mobile service requires a good connection, so it will struggle at congested coffee shops and anywhere people fight over bandwidth. Michael Pachter, an analyst at Wedbush Securities who covers the gaming market, notes that this may remove some of the luster from OnLive’s latest venture, and that most gamers like to play on the big screen at home. “Still, there are parts to games where you have to gather stuff, and people will do that on a small screen on a bus or train and not care,” he says. OnLive, whose investors include AT&T (T), HTC (HTCKF), and BT Group (BT), has worked with carriers and device makers to make sure its compression techniques work well on wireless networks.
The biggest achievement of the OnLive Mobile service may be that it reinforces in people’s minds just how far cloud gaming has come, Pachter says. The next time Microsoft (MSFT) or Sony (SNE) releases new consoles, consumers might think twice about paying for the pricey hardware. “OnLive has come out with this stuff way before the next-generation consoles arrive as a proof of concept,” Pachter says. “If OnLive continues to advance the state of technology the way they have, they will give people a reason not to buy consoles.”
The bottom line: Cloud gaming service OnLive is now available on mobile devices and may cause some gamers to skip the next generation of consoles.