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Investors betting on startup's "cloud-based" gaming service to change the industry
OnLive, a "cloud-based" service that is causing quite a stir in the video game industry, announced it received a new round of funding. The Series C round included AT&T Media Holding Inc and Lauder Partners. Previous investors Time Warner, Autodesk and Maverick Capital also particpated in the round. The company previously raised $16.5 million back in 2007.
The funding, which has yet to be disclosed, is said to be a, "large investment at a large valuation." Rumors are spreading that the final valuation is likely to be above $500 million.
So why are investors betting on this Palo Alto, Ca.-based gaming startup? Well, for one it's a whole new approach at how we go about consuming video games. Being that its services are "cloud-based," means gamers never have to go out and purchase a $50-60 dollar game again. They simply subscribe to a monthly OnLive service plan, and play whatever OnLive has to offer. OnLive has yet to announce how much this subscription will actually cost.
How OnLive works, technically - it basically removes the whole aspect of having to download, install, insert a disc, insert a cartridge, etc, when loading up a game. How does it do this - OnLive streams the video signal of those games to our device, whether it be a TV or computer simply through our Internet connection. If you are playing on a TV, there is one piece of hardware involved, a console smaller than the actual controller, which outputs the video signal to your television. The games are being run up on OnLive's servers. So if my computer doesn't have a really powerful video card, I can still play some high quality games because I'm simply streaming the video signal. This removes completely removes one big element of the traditional gaming model - the need to purchase a video game console, a direct threat to companies like Sony, Microsoft and Nintendo.
OnLive recently launched its public beta earlier this month and has been testing hundreds of thousands of users. The company is utilizing three data centers to support all its on demand users, and plans to use five data centers around the country at launch date later this year, according to Reuters.
Steve Perlman, CEO of OnLive was previously co-founder and CEO of WebTV which sold to Microsoft for $503 million.
As for where the funds will be allocated, according the press release, OnLive will be using them to make this winter launch possible and to protect its intellectual property rights.
I was about to purchase a PS3 Slim but with everything that's going on with this company, I just might wait until winter when OnLive is said to launch, to make my decision. After all, OnLive has quite the list of current partners it's working with, including EA, Ubisoft, T2, Eidos, Atari and THQ, naming a few.
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