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Soleron said:

No, because current computer hardware is very cheap and no game in the last few years has pushed hardware further than Crysis. I don't think game graphics will advance as fast as hardware can from now on, because the cost of development is too great and the market that would attract too small.

For example, $600 would get you a machine that would play all current games except Crysis on high settings at 1920x1200. If you were to buy a cheap $400 Dell and use OnLive, $200 in subscription fees would not take that long to accumulate, certainly shorter than the usable lifetime of the $600 PC. OnLive as a subscription is poor value now, and will only get poorer as hardware advances but games do not.

People value consoles for three reasons, I think: exclusive games; the knowledge that just buying the disc and putting it in will guarantee a good experience; and unique control schemes. The first will not go away. The second is because most PCs can't run games well because the spec is too low and because it's hassle setting up a PC. OnLive could make some headway there. The third can't be matched by OnLive effectively. So it will damage the X360 and PS3 is anything, because they are very close in design to a PC and share many games and features. The Wii won't even be touched; its selling points can't be duplicated by OnLive.

OnLive is a technology-based solution, whereas the vast majority of customers couldn't care about technology when they decide what to buy (That's why PS3/X360 aren't selling that well - they still think graphics and tech sells). Nintendo (and Apple, for that matter) are selling an experience, and suceeding.

Beyond that, probably less than 10% of gamers buy more than 1 game a month (on average) and very few gamers would average more than (about) $1200 per year on gaming in total (including hardware expenses). Gamers often complain about the expense of a $50 year XBox Live subscription or a $10 month subscription to a MMO, and I just don't see the market for a subscription service for access to games at (much) higher than $25 per month; primarily because people have access to an unlimited number of games at that price from online rental places.

Even from a technical perspective, you have to wonder what happens if your internet connection is less than optimal ...