OnLive, or how much longer will Xbox 360 be an actual box?

So, OnLive was released in the UK today and we managed to get our greedy little mitts on it. What did we think? Well, in all honesty we were pretty much blown away, the ramifications of such a device glaringly evident. So much so, in fact, we had to stop and ask ourselves whether the Xbox will always be a physical, under-your-TV, I-can-actually-reach-out-and-touch-it gaming console.

For those of you not completely au fait with OnLive, allow us to explain. OnLive is an on demand gaming service that enables its player to play high-end PC games without the need for a gaming-spec PC or even to download the games they play.

How does this work? Well, everything exists in the cloud, which is to say the game data is stored on some external server out there in the wild, and then video is streamed in real time to the player’s internet browser, iPad app or set-top box. All the processing is done at the server’s end, meaning you can play high-end PC games on incredibly low-spec hardware.

The common criticism of this set up is lag, and its effect on the gaming experience. How can you play speedy, reflex-sensitive games like Call Of Duty when you’re lagging because the server isn’t streaming fast enough? It could mean the difference between a headshot or an unfair death.

OnLive’s marketing materials claims that a minimum of 5Mbps is the internet connection required for HD-quality graphics, and considering that’s the average broadband speed for the UK it’s not asking much. However, without extensive hands-on time we won’t be able to report for sure whether the system works.

Still, we have had a short amount of hands-on time with OnLive on the games Dirt 3 and Deus Ex: Human Revolution, and we can report that although we did notice moments of lag the games were, for the most part, pretty flawless.

And they looked astonishing too. OnLive’s library is comprised of PC games, and the system automatically sets the options to the highest setting. We all know the best looking games are on high-spec PCs, and Dirt and Deus Ex looked absolutely beautiful, running at a framerate that was mostly as smooth as silk.

Again, without a longer period of testing we can’t confirm if OnLive’s claims hold true, or if the system is too laggy to provide the entertainment we already get from our consoles, but it almost doesn’t matter. The concept is here. It’s been proven in theory. The idea is now lodged in the collective consciousness.

The hard part will be convincing gamers who have become very accustomed to a very particular way of consuming their games over the last thirty or forty years that there’s a better way to do it. But it’s happened before – gamers were quick to uptake online gaming when that first stated becoming prominent, affordable and easy, and the same goes for digital distribution and DLC. If OnLive and similar services like Gaikai can prove that cloud gaming is just as easy and affordable and that it actually works, the way we play our games could change forever.

If it becomes popular – and OnLive is going to have to work pretty hard if it’s to ensure that it does –  and starts to take market share from the big three console manufacturers then there’s every chance we might not be seeing an Xbox 720, or even an Xbox at all. Microsoft’s service could become something else entirely – a way of playing games that doesn’t need a disc or a console and still looks better than anything that kind of media could produce.

It’s going to be an interesting few years for the videogame industry. Exciting too. OnLive is a concept fraught with problems, but if it can overcome them we might see a wind change in the entire way Microsoft does its business.

Pricing details, a list of the games currently available on OnLive (nearly 150), and an FAQ answering most questions you have can be found here on NowGamer.com