OnLive sounds like a good idea in theory but in practise it would require huge amounts of money to get working. It would require hundreds of servers around the world and each of them would have to be as powerful as fastest supercomputers in the world. Assuming, of course, that there millions of players.
You can't compare servers to MMO servers because MMO servers only have to deal with relatively simple commands (most computing still happens in your own computer). Server which can have 10000 simultaneous MMO players, couldn't even handle 1000 simultaneous OnLive players even with PS2 quality. Heck, if they would play Crysis with high quality, it could not even handle 10 players.
I wouldn't say this is impossible concept but it would require more money to work than development of 360, PS3 and Wii combined.
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