The service is demoed here, but for those who don't click through -- OnLive is a small, 1MB plugin for your Mac or PC, or a small hardware box for your television, that promises to allow you to play top-end PC games on your entry-level computer, rather than dropping $2,500 on a gaming rig. It works by "cloud processing," which essentially means that the heavy lifting of running the game is done server-side, and the video is streamed to your computer or TV through your broadband connection. In theory, the only limitation on what games your system can support is the speed of your connection.
Opinions about OnLive on the Web fall into two major camps. The first is "If this works, it will turn the gaming industry on its ear." This is definitely true, but it probably won't -- as some predict -- herald the end of the gaming console industry. One reason is price: Although a service like this is almost certainly cheaper than maintaining a current gaming PC, which can cost thousands of dollars, it's hard to imagine that it'll be as cheap as a Netflix account or a subscription to WoW. If the pricing is similar to a high-end cell phone plan or a DVR/on demand TV service, it won't price Microsoft or Sony out of the gaming market; gaming consoles will remain the choice platform for gamers on a budget.
The second camp is "This can't possibly work." Eurogamer ran an informative article on the unsustainability of OnLive's model: "Realistically, there is no way it can work to the extent suggested, and no way it can provide a gaming experience as good as the one you already have without inherent compromises. It's a great idea, and an intriguing demo that is amazing in that it actually works at all. However, away from the concept and the tech demos running in controlled conditions, OnLive raises so many technical questions and seemingly overcomes so many impossible challenges that it can't possibly work," Eurogamer's Richard Leadbetter writes. Obviously, if just it doesn't work, OnLive won't be the first piece of VaporWare in gaming. But if it does work even passably, it can bring high-end PC gaming to a mass audience -- something that has eluded the gaming industry thus far.