What is OnLive?
OnLive is a cloud based gaming service. Something that has never been tried before. Normally if you want a game you need to go to a store and buy it and bring it home. Or you download it from the net which can take hours. With OnLive you download a 500KB program and from then on there's no more downloading. The high end games are run on servers at a data center somewhere far away, then the video is streamed to your computer over the internet and your control inputs are sent up to the cloud. This all happens nearly instantaneously so you should feel no lag. Currently there are 3 data centers in the USA.
What do I need to play?
One of the great things about OnLive is that you don't need a high end computer to play high end games. If you can play a 720p YouTube video you can play OnLive. That means if you have a low end PC or an older laptop you can still play the latest games. Even if you have a mac you can now play the latest games. Also in the near future there will be a micro-console that allows you to play on your TV with an included controller. You also need a broadband internet connection. For HD quality they recommend a 5Mbps connection or faster. If you have a 1.5 Mbps connection you can still play but the quality will be brought down to SD level. A slow internet connection can also cause a slight lag in the controls. My connection is 15Mbps FiOS.
How does it look?
The graphics quality seems to vary slightly from game to game and also seems to depend on your internet connection. For me everything has looked utterly fantastic considering that it is only 720p, however I have seen a few other reviews that complained of muddy graphics. Though it's also possible that some of these reviewers are either overly sensitive or biased. The image below shows how it looks to me.
You can also see an example video I made showing the basics of the service below.
Isn't this the same as Steam?
I see a lot of people comparing OnLive to Steam. Really the only thing that makes these two similar is that they allow you to buy games over the internet. Steam requires that you download the game and install it. This could be a benefit or a disadvantage depending on your point of view. They also charge you for downloadable content which OnLive does not, the DLC is either included with the game or automatically added to the game when it becomes available. OnLive also automatically adds any patches or updates to the games so you nevr have to worry about downloading and installing them.
How much does it cost?
Here's the big question everyone wants to know. The service itself does come with price tag, though for anyone that signs up during the first month it is free for the first year and the second year is $4.95 a month. For anyone who is late to the game it's $14.95 per month. The games prices are set by the publishers but the range anywhere from $5 to $50. Instead of using the word "buy" or "purchase" OnLive sells you a Playpass which gives you the right to play that game for at least 3 years as long as you still have the service. These passes can also be sold for shorter amounts of time like 3 days or 5 days, which acts like a rental service.
Some people complain that either the games or the service should be free, one person even suggested that the service should be $4.95 with free games. That's cheaper than NetFlix and games cost a lot more than movies. Consider that the service cost goes to cover the data centers and bandwidth, while the games cost mostly goes to the games publishers just like any brick and mortar store. So taking away one of those just would not work.
Over all my impression is that it's a fantastic service with a few small down sides. The biggest being that you don't get a physical disc or even download of the game so if you stop using the service or if something happens to go south with the company then you're out of luck. So therefore I might just end up using as a rental service for the most part. Aside from that I think it's a great service, especially if you sign up now and get a free year. I'm glad I did.

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