Cloud-gaming service OnLive set for launch

LOS ANGELES (Reuters) - OnLive announced on Tuesday initial lineup of games and a new pricing plan ahead of its launch on Thursday, as the “cloud-gaming” service prepares its much anticipated rollout.

OnLive emerged from years of stealth development in 2009 with a plan to offer instant, lag-free access to video games stored remotely on servers in data centers. The launch is being followed closely in the industry, as it is as a potential threat to traditional console-based gaming.

OnLive will have more than 20 games available for rental or purchase at launch on June 17, including titles such as Ubisoft’s “Assassin’s Creed II,” Electronic Arts’ “Mass Effect 2” and Square Enix’s “Batman: Arkham Asylum.”

Nearly all the top publishers are offering games, with the notable exception of Activision Blizzard, the world’s largest independent publisher by market valuation.

OnLive will be available at no charge for the first year, through a limited time offer sponsored by AT&T, which is also an investor in OnLive.

OnLive declined to say what it will charge on a monthly basis going forward, saying only it will be substantially less than the $14.95 price it originally announced. The service is accessed through a standard personal computer, and will be available on televisions at a later date, the company said.

Games will cost as much as $60 to buy -- comparable to what a traditional packaged game costs -- with OnLive taking a cut. It will also offer 3- and 5-day rentals for less than $10.

OnLive Chief Executive Steve Perlman said publishers are eager to see OnLive succeed because digitally distributed games have far better margins than packaged ones, and because they effectively eliminate the used game resale market, from which publishers don’t see a dime.

“Publishers have been putting a lot of pressure on the console makers to come up with a solution to used games...they haven’t, OnLive addresses that,” he said.

OnLive is being closely watched in the industry -- both to see if the technology works as advertised and whether gamers will adopt to the model, which is similar to the on-demand movies that consumers now rent through their cable companies.

More than 25,000 users have already pre-registered for OnLive, Perlman said.

OnLive has installed thousands of custom-designed servers from Dell Inc in data centers clustered in different regions of the United States to handle the demand. The company plans to add new users carefully, so as not to overload the servers and cause any service hiccups.

Andy Rhodes, marketing director for Dell’s Datacenter Solutions business, said OnLive is just the latest evidence of the technology shift into the so-called cloud, a term that refers to accessing data or services stored remotely as opposed to locally on a PC.

“I see it as the start as of a move of processing power from consoles into data centers...from the center of the living room into the data center,” Rhodes said.

Reporting by Gabriel Madway; Editing by Sofina Mirza-Reid