Wirehead Studios

http://www.youtube.com/watch?v=stsUce3ebs8

http://tech.yahoo.com/blogs/patterson/43797

Anyone remember how Unix-based mainframes work?  You have a massively powerful computer behind the scenes doing all the crunching called the mainframe, and you have "dumb terminals" that consist of a display and a keyboard.  The mainframe does all the work, the terminals are just access points.  That's all this is, done over the internet.  You provide input via keyboard, mouse, joystick, etc, the input goes out to the OnLive server, and you get images and sound streamed back to you.

I can see several reasons why this won't replace localized game content.  First, latency.  Everyone here knows how ping works.  Now imagine that latency induced into every single game you play, and it's unavoidable.  If the nearest OnLive server is 200 msec away... It would be like playing Net Quake over the internet.  One good way to see what it would be like is to connect to a Q3 server and type /cg_predict 0.  Try playing like that for a while and see how enjoyable it is.  Without localized content and game logic you cannot do prediction, period.  Without prediction, latency is very annoying and very noticeable.

Another factor is connection quality and bandwidth overhead.  Streaming HD-quality graphics takes up a lot of bandwidth, and any disturbance to that stream is going to mean the difference between dodging a bullet and getting your virtual character's head blown off.  If your connection isn't 100% smooth you'll have problems.  Anyone have family members that tie up the net downloading rubbish?  That 5-7 Mbit connection gets divided between all the computers on the network, and if someone else starts streaming something at the same time then what is going to happen?

Lastly, let's consider gameplay quality.  Are we talking YouTube-like compression coming in at a 30 FPS frame rate?  If it's HD image quality, again, what about the frame rate?  What kind of user controls are going to be in place for customization?  I can adjust and customize lighting and other effects locally.  How do I control what the server is going to render?

Any time someone comes up with this "Oh, let US host everything, you just pay us a monthly fee and we take care of it" scheme I cringe.  Tell me how this service is going to outperform my own system where I can render games at 1280x1024 or higher at 75Hz with FSAA, Anisotropic filtering, have instantaneous response, AND customize the game's controls as I see fit?  The subject of mods and multiplayer gaming wasn't even touched either.  In addition, my computer did not cost $4000 to build.  It cost probably about $1000 over the last three years after all the upgrades have been considered, but initially it was around $600-700.  Anyone paying $4000 for a computer is either ignorant and being fleeced, or too rich to care one way or another.  I also use the computer for a lot more than playing video games.  This service may have use to some people, but I don't think it's going to replace installed games any time soon, just as Steam and similar download-only services have not done away with box-on-shelf distribution.

Kind of Off-Topic here, but mind to tell your pc specs?

My current specs:

CPU:  AMD Opteron 175 dual core 2.2 GHz CPU, overclocked to 2.52 GHz
Memory:  2 GB Corsair XMS PC4000 DDR RAM
Mainboard:  Asus A8NSLI-Premium
Video:  MSI GeForce GTX 260 with 896 MB video RAM
Hard Drive:  Seagate SATA 160 GB 7200 RPM, 8 MB cache
CD/DVD Drives:  Asus 52x CD-Rom, Pioneer DVR-109 DVD/CD Writer
Floppy Drive:  NEC 1.44 MB 3.5" floppy
Audio:  Onboard
Power Supply:  BFGtech 650watt PSU
CPU Cooling:  Thermalright XP-120 with 120mm fan
HD Cooling:  2x Sunon 50CFM 80mm fans front mounted in case
Intake/Exhaust:  2x 32CFM 80mm fans (forget the manufacturer), 1x 50mm fan, 1 42CFM slot blower
Fan Control:  Vantec 5.25" with 4 fan controllers, 18 watt capacity
Case:  Midtower with 4 5.25" external bays, 1 3.5" external bay, 8 3.5" internal bays, full ATX board capacity.
Operating system:  Windows XP SP2

Pho: Agreed. You've pretty much said everything that I was about to say, but more eloquently.

A good example of your fourth paragraph is the PS3-PSP remote play function. It allows you to manage your PS3 content from anywhere in the world over the net. It also allows you to play PS1 games - download or disc - via the PSP. Great in theory, but in practice it falls way short of the mark. It is, as you said, Youtube-esque, with choppy sound and hopeless latency, even if you're running it in the same room over Wi-fi. The PSP also gets ludicrously hot doing this, so in the end I saved my fingers any more pain and custom firmwared its ass.

If this is the sort of crap you get with a PS1 game over a Wi-fi connection three feet away Christ knows what a HD game over a broadband connection is going to be like. My connection is pretty basic - 2Mb to be precise - and it sure as Hell won't be enough to handle something like UT3, despite my own PC being able to handle the game pretty damn well in itself, even in 1920x1080.

Then there's the question of connection dropouts - don't mean to be pessimistic here but I guarantee that it has happened to everyone on this forum at some stage or another. Even the most stable connections have their "off" days, so you're right at the end of, say, FEAR 2 and your net goes down. Game over? Stuff that.