Will Onlive destroy Netflix as we know it?

[AlexTheLion]

Lots of people seem to be worrying about whether Onlive will destroy game consoles, but no one seems to be wondering if Onlive will ruin Netflix. If you can stream HD videos, games, and tv all in one place, won't people rather do that than stream videos from netflix, play games on consoles, etc. in differentt places? Just a thought

[BeteNoire]

I wasn't aware that OnLive will offer streaming TV/videos?

And if they do, I don't see it killing off Netflix. Plenty of people still subscribe to Netflix just to have the DVD's mailed.

[rasmasyean]

It doesn't appear that HD streaming is controlled exclusively by Onlive. Whether they have technology that can do it "better" remains to be seen. But other companies offer HD video conferencing with just consumer units at both ends so...

It's more probably that Netflix will soon offer more HD movies. It could be done now, but the main business decisions are made between the studios and the providers. It's a business decision here. Not technology, it seems.

[Aph0ticShield]

Lots of people seem to be worrying about whether Onlive will destroy game consoles, but no one seems to be wondering if Onlive will ruin Netflix. If you can stream HD videos, games, and tv all in one place, won't people rather do that than stream videos from netflix, play games on consoles, etc. in differentt places? Just a thought

Well, they have not specifically said that they will go with those alternative services, but they have said that it is a possibility. My guess is yes... It will kill the online version of Netflix, if they go with movies.

[B1553r]

No. OnLive has zero agreements with movie publishers. Instead you will see OnLive integrated into other devices the way Netflix has been. Eventually you will start to see TV's with the game and video services built right in. Then all the various remotes and game pads etc etc will all be blutooth or some such. This will continue until 2020 when the whole giant hairball becomes a monopolistic nightmare and there will be a monopoly action against whoever is the 'winner' of this emerging platform, and then around 2022 we can get our Open TV's.

But for the next 5 years it is all mergers and acquisitions. This has happened before, it will happen again.

[Bootstrap Bill]

No. OnLive has zero agreements with movie publishers. Instead you will see OnLive integrated into other devices the way Netflix has been. Eventually you will start to see TV's with the game and video services built right in. Then all the various remotes and game pads etc etc will all be blutooth or some such. This will continue until 2020 when the whole giant hairball becomes a monopolistic nightmare and there will be a monopoly action against whoever is the 'winner' of this emerging platform, and then around 2022 we can get our Open TV's.

But for the next 5 years it is all mergers and acquisitions. This has happened before, it will happen again.

We may see another paradym shift by 2022. Maybe we'll have Utility Fog by then. (see http://www.kurzweilai.net/meme/frame.html?main=/articles/art0220.html?)

[rasmasyean]

No. OnLive has zero agreements with movie publishers. Instead you will see OnLive integrated into other devices the way Netflix has been. Eventually you will start to see TV's with the game and video services built right in. Then all the various remotes and game pads etc etc will all be blutooth or some such. This will continue until 2020 when the whole giant hairball becomes a monopolistic nightmare and there will be a monopoly action against whoever is the 'winner' of this emerging platform, and then around 2022 we can get our Open TV's.

But for the next 5 years it is all mergers and acquisitions. This has happened before, it will happen again.

I thought by then the cloud will become self aware and all will be over.

[B1553r]

I thought by then the cloud will become self aware and all will be over.

Heh, Did you know that IBM is delivering a 20 Petaflop computer to Sandia in 2012? Just three years after the Petaflop barrier was broken, they will be turning on a computer more powerful than all the current super computers in the Top500 combined?

One of the few projects that we know about that gets run on the Petaflop computer is something called Petavision, where they simulate the entire human visual cortex, down to individual neurons.

Put me in the category of people who think we are safe from that particular singularity for the time being. But there will soon be ethical considerations to make about computer technology.

[jualiryio]

I wanna know if there's any chance that Onlive will offer streaming Netflix. It would be a LOT easier to get my SO to let me pay for Onlive if I could drop the 360 gold sub that is required to stream Netflix on the 360.

THAT would be a killer app for me. Hulu would be nice too.

[philnolan3d]

No. OnLive has zero agreements with movie publishers.

I've wondered about this actually because if you look at the Coming Soon area of OnLive there's a Harry Potter trailer and it's very clearly a movie trailer, not a game.

[Redsox46]

Need to get the quality higher and have some digital rights management software in there (looks like they do) and Netflix would be toast with this.

Run the movie in the cloud and stream it down perfect. I think the telco's like this model a lot better - it requires bandwith and they can get people to upgrade their packages.

[tibbon]

RedSox, I have to say I disagree with you on this. It won't kill Netflix. And Telcos of all sorts actually seem to hate people using their capacity. AT&T dislikes it with the iPhone, and Comcast dislikes it with their cable service. Each put caps on usage regardless of what package you buy.

Netflix is a very different service from OnLive. For one, they don't have to optimize their stuff for realtime. Doing so is costly and requires much more significant overhead and per-stream costs. People aren't waning from using the DVD/Bluray shipment services either. They have one of the most amazing physical systems for handling media in the world. OnLive isn't going to replicate that anytime soon and the capital investment to do so would be far beyond their investment. The mindshare that Netflix has built up over the past 15 years is significant as well.

OnLive might be cool, but these delusions of grandeur that they will take over every line of business just isn't well thought out. NetFlix has their stuff down to an art.

If OnLive tries to start going after every market out of the gate, they will fail. They need to choose their battles wisely and not waste millions chasing down every dream,hope and possibility.

[lovekeiiy]

tibbon has great points.

No, OnLive is not going to bring to down Netflix. It's not even a threat. Netflix is working on trying to get their Instant Watch service on as many devices as possible that get attached to the TV in the living room. OnLive may have plans in the future for this, but it's not there by any means. Heck, the microconsole has not even been released.

The other issue is what business model will they use if they do bring a video on demand service. There is a reason why Netlfix does not get to release new DVD releases from major studies on the instant watch services. The major studios want a big chunk of money; it's read something in the neighbor of 70% revenue, compared to the 30% from DVD/BR. I don't see this being a effective model for OnLive. What they may try is something like iTurnes, Amazon, VuDu, and so forth, where you pay for each movie you view rental service instead of the subscription model. This is easy as for each rental, the studio will get a specified amount of the rental fee, instead of something based on projected views, and some percentage of the revenue stream from subscription fees.

There is a reason why Netflix is really the big player in the business model they do. I've been a long time customer of theirs,and I haven't used the other services very often. I know blockbuster is making a business model shift, but I don't know much on it. They may have subcription model, but don't know it. I know they're going the way of Redbox.

[Squarewave]

It is extremely unlikely that onlive will have any impact at all with netflix. They are both completely different services and pricing plans as well as netflix being a much larger company. If Onlive ever wants to add a movie streaming service it makes far more sense for them to make a deal with netflix just as Microsoft and Sony did when their movie services flopped.

Gamefly on the otherhand might be in trouble if Onlive were to have a flat rate pricing plan for rentals, like say $15 a month for access to one game a week

[drhydralisk]

No one even knows about OnLive.

[philnolan3d]

No one even knows about OnLive.

It may be new but I don't know if I would say that. According to Perlman the number of sign ups has far exceeded expectations.

[tibbon]

It may be new but I don't know if I would say that. According to Perlman the number of sign ups has far exceeded expectations.

It is the prerogative of every CEO to say that. Rarely do you hear a CEO publicly saying, "Yea, we just barely met our goals. It was sufficient, nothing too special". I'm not calling him a liar, but I'm also letting you know how a CEO is supposed to represent their company in public. He'll never attract additional investors if he doesn't hype it some.

I'm sure they have had positive results, and they are working to keep up with demand. Yet, I don't feel that they are coming out of the gate with hundreds of thousands of users. They are keeping numbers close to their chest for a reason. I'd do the same.

For some scope, Netflix has over 13 million paying subscribers- all generating monthly continuous revenue. Unless someone cancels their service quickly (which few do) then the minimum ARPU is $107.88 for users with the single disk plan. I'm sure their real ARPU for non-trial customers is closer to $150, which is massive. Even their trials have rather high conversion rates, and through great SEM they are able to snag people at fairly low conversion costs, and have a recurring customer that is worth a great deal.

Keep in mind, Netflix came out of the gate making significant revenue on each user. They launched at the birth of the DVD player and took off from there. I think my household for example has 3 Netflix accounts in total. OnLive is pushing some revenue, but I'm guessing a large percentage (65%?) of their customers have made zero purchases, and 20% have made 1-2 purchases with no current recurring subscription fees. However, each non-paying (but user using it as a demo service) does incur a significant cost to them through bandwidth and CPU usage.

[philnolan3d]

I know that businesses need to put on a good face, but they can say we've done well or we've exceeded expectations, but you'd think if he was going to exaggerate he would only exaggerate a little. Exaggerating a lot sounds like you are lying.

BTW I slightly misquoted. What he technically said was "far beyond what we had projected." not that that changes much.

[barzattacks]

Yes I truly believe when he said (and i take it as openly admitting as opposed to amping it up) that they literally had to set up a whole room in their emergency location over night to handle the load. I think it was an open admittance that sh*t almost hit the fan but they recovered because of there proper planning. I think everything about this service even working is about proper planning and proper load balance.. which they are doing a damn good job.

[tibbon]

I know that businesses need to put on a good face, but they can say we've done well or we've exceeded expectations, but you'd think if he was going to exaggerate he would only exaggerate a little. Exaggerating a lot sounds like you are lying.

BTW I slightly misquoted. What he technically said was "far beyond what we had projected." not that that changes much.


My guess is that they had multiple sets of projections (I'm sure of it in fact), in various scenarios. I'm sure they are doing well, but I'm also certain there must be some things they are behind on- because there is never a commercial project that runs ahead of time one every goal. Either that or I want to hire their project managers :)

[tibbon]

Yes I truly believe when he said (and i take it as openly admitting as opposed to amping it up) that they literally had to set up a whole room in their emergency location over night to handle the load. I think it was an open admittance that sh*t almost hit the fan but they recovered because of there proper planning. I think everything about this service even working is about proper planning and proper load balance.. which they are doing a damn good job.

They are definitely doing a good job. I just fail to believe that they are going to take over every market sector as many of us would like to imagine they will. :)

[Redsox46]

I agree with almost everything said with the exception of Tibbon's comment that Telco's don't like it when people use their capacity. They love it, because then they can sell a larger package or charge additional usage fee's.

Here is the disconnect. I don't think Netflix is dead tomorrow but in 3 to 5 years they are going to need to seriously reinvent themselves. It is also several things coming together that creates the threat: 1) Internet connected TV's 2) An ability to launch applications through widget's on the television 3) cheaper and cheaper bandwith 4) cloud computing are all coming together. I think in 5 years the telco will more then likely only provide the pipe. You will go directly to HBO's channel on the Internet and you can stream Trueblood or Entourage. HBO will not need the cable guys for distribution of their content anymore. They just need their pipe to stream it directly to the consumer.

The idea of Netflix shipping cd's is what will get hit. Gamefly definatly has this issue. The cloud and streaming content is here to stay. The only reason I keep my cable subscription right know is sports. It still is not that good on the internet.

Said simply: in 5 years your computer really will just act as an Monitor with Internet connectivity. Maybe wrong on the timeframe but it is clear this is happening.

[Alex]

Netflix is basically ad free and very streamlined for a good price. I suspect that that OnLive will just help netflix along it putting streaming above the DVD and BD stuff on which they have to make much less money. They should drop those other two formats as soon as possible.

Whats to stop Netflix from offering games and music?

[philnolan3d]

The downside to NetFlix streaming is that (AFAIK) you don't get high-res HD and you do need a high speed connection, like OnLive. With discs in the mail you could have no internet at home at all, maybe pick your queue from your work computer.

[tibbon]

I agree with almost everything said with the exception of Tibbon's comment that Telco's don't like it when people use their capacity. They love it, because then they can sell a larger package or charge additional usage fee's.

That's what would make sense right?

Yet, Comcast has instituted 250GB/month bandwidth caps. A consumer can't buy a bigger package. If you go over two months (not in a row, just over the lifetime of the account) they will simply cut you off from their service, and consider that you were 'abusing' their service. They aren't upping the numbers some each month to account for additional streaming services either or increased capacity.

Similarly, AT&T (and investor in OnLive) put in 2GB/month cap on iPad & iPhone customers. They claim they can't keep up with capacity (and in some areas like San Francisco or NYC, they certainly seem to have a hard time with it. You should have seen the equipment they pulled out at SXSWi to try to keep the network online), and that people who use more are abusing the network.

I really hope they change it, but overall they work more on a gym-plan like model. They oversell their capacity by a large amount, and hope that 95% of users will never step foot in the gym to use it. They do like upselling you on 'speed', but not on total transfer or usage. And the speed they sell you is only in theory, and they will never offer consumers SLAs like they would for business T1/T3/OC48 customers who are buying big fiber pipes.

I've blogged a bit on it, and it really doesn't make sense. I'm hoping they change their tune.

I think the biggest thing that is in danger is cable TV for sure. I haven't had cable in 8 years, and I'll probably never have it again.

[rasmasyean]

I think to some degree in the future, you will have the "tripple play" rehash regarding media dervices like this. Onlive, or other companies, it doesn't matter in the end, but if you looks at Time Warner, RCN, Comcast, they all offer all communication services in one package.

[rezonant]

I think the much more interesting question is: would onlive just strike a deal with netflix to bring the service to onlive the same way netflix is available on the 360? That is, once any relevant exclusivity deals expire... I'm sure they'd rather import a whole service complete with distribution deals rather than spend the laborious time securing the deals with content providers. As we've already seen with OnLive's game catalog and Hulu, this can be a tough job.

[lovekeiiy]

Interesting points of course. There is one underlying problem with Netflix needing to change their model and everything else. It all relies on the average consumer having broadband speeds, and (possibly) some tech know how. Last year, the US had almost 25% broadband penetration. Although I do believe at some point we'll see that 75% or more number, until it is that high, Netflix will remain similar as it is today. And to get BR (1080p high bit rate) resolution, speeds have to get high and way more consistent. Granted, most people are not that big of videophiles. I think Netflix sees the future, and why they did do the instant watch service. The cable and satellite companies with their video on demand services have some free stuff, but a lot of rental service (pay per view). On a side note, XBL and PSN do make money on their VOD services. It's one of first areas that the 360 made mnoey from the get go.

As for the bandwidth, there is an issue of the companies trying to keep up with demand. AT&T says it's like 5% of users that use 90% of the bandwidth. What they're imposing is that that go over their cap limit is a overage fee. I don't know how much that is since I don't use AT&T. Comcast does have the 250 gig limit. In their TOS, it's not an instant cut off. What they'll do is send you letter to say to stop the heavy use. From there, they'll put you on a business line. And their cap limit is on both uplaod and download. It's not hard to blow past 250 in a month. I've hit over 600 in a thirty period. I think they would rather put people on a business line of business and charge a lot money for it. They may raise the limit at some point, but I don't think it will be soon because of the bittorrent file sharing they're trying to help combat.

I personally don't see TV ever going a la carte for some time. It may happen where we can choose what channels we want. I just don't see TV going IPTV that soon. We're still in the infancy, and business are trying to figure out how to make money. TV is changing and advertising is the main source of money. Stuff like Netflix, Hulu and so forth are causing ad revenue to drop. A lot of local channels, those we get over the air, and really taking a hit. Until that is solved, and it becomes easy to setup for Joe Consumer and is reliable and stable, it's not changing quite yet.

Remember, the bulk of us on here are on the bit of tech savvy, and earlier adopter. Thiink about your neighbors, parents, and so forth, and how will they would be accept accept this. A fine example is me. I've been on Netflix since they introduced the unlimited rental time (close to ten years). I did some instand watch when it first came out through a laptop. I got the Roku Box two weeks after it came out. Got a second one for the liviing room. Been in there for two years. The other people in the house use it here and there. They just couldn't get past adding movies to the que using the PC. They new user interface for Netflix to be able browse the catalog, similar to the 360, PS3, and Wii, they're on it all day long. They want maybe two hours of TV a day--about an hour in the morning and an hour at night for news and misc shows.

[drhydralisk]

I am to lazy to read what most of you are saying but why are we comparing OnLive to Netflix? Last time I checked OnLive doesn't stream movies and Netflix doesn't stream games.

[Lord Xenu]

Honestly, if this came to be a problem, OnLive wouldn't make it in the movie business if their launch is any indication. On top of that, Sony, Microsoft, and Nintendo already have the Netflix/Movie Market owned. I can't think of anyone wanting to pay money to stream movies outside of what is already out there. Think about it, OnLive is PC/MAC based. Why would anyone want to use OnLive when Netflix already streams to the same computer than OnLive is running on? There would be no point what so ever. If not Netflix, there are other ways to stream and play movies on your PC. The only people who would spend money are complete morons or someone who has money to burn indiscriminately.

[rasmasyean]

You are right, not everyone is a "videophile". Incidentally, that makes it much easier to penetrate them.

This will get broadband across the country.
http://en.wikipedia.org/wiki/4G

Did Onlive say they used Vista servers?
This is 1080p- dynamic streaming technology. It's supposed to auto-detect on the fly. You can play with the bars and see it simulated.
http://www.iis.net/media/experiencesmoothstreaming1080p

I think VOD is a lot more popular than you'd think these days. There are so many channels already that have it. HDVOD too. That is...through the cable company. The only reason why it's not a "huge library", is because they just want to cycle it and keep you waiting and playing for hte upcomming shows. And as you mentioned...a business model.

[rasmasyean]

I am to lazy to read what most of you are saying but why are we comparing OnLive to Netflix? Last time I checked OnLive doesn't stream movies and Netflix doesn't stream games.

You are right, but I think most companies adapt to new businesses when the technology becomes available and they have the means to easilty transition to it. Sometimes it because the CEO is ambitious...others is because the company will die if it doesn't find a new road.

[tibbon]

You are right, but I think most companies adapt to new businesses when the technology becomes available and they have the means to easilty transition to it. Sometimes it because the CEO is ambitious...others is because the company will die if it doesn't find a new road.

Why instead shouldn't they focus on getting the gaming right and holding that market strongly? Being overly ambitious and spreading themselves thin is about as smart as a land war in asia, or a two front war in europe...

[rasmasyean]

Why instead shouldn't they focus on getting the gaming right and holding that market strongly? Being overly ambitious and spreading themselves thin is about as smart as a land war in asia, or a two front war in europe...

Yah, Microsoft should have just stuck with making operating systems. They are suffering now because of so much diversity.

[tibbon]

Yah, Microsoft should have just stuck with making operating systems. They are suffering now because of so much diversity.

If Microsoft had came out of the gate trying to make email services, web browsers, gaming consoles, search engines, operating systems, databases, etc... they would have failed. There wasn't sufficient capital to do all of that at once. They've been working at this over 30 years, and their actions over the past 5 years haven't been their best examples of their work, with the exception of the Xbox 360 which has been executed gracefully overall (except for the RRoD issues).

When OnLive is 30 years old, there will be different challenges to face than there are today- just as Microsoft has different challenges now than 30 years ago.