OnLive's New iPad App for Watching Video Games: A New Niche
OnLive, a new cloud-based game service, is starting to deliver live video game footage to the iPad via an app. It sounds like a strange play -- the opportunity to watch other people play your favorite video games -- but it could be a new way OnLive can make money outside of game downloads themselves.
When it comes to watching gaming competitions online, the obvious comparison is to major sporting organizations like the NFL, NBA or NHL. Outside of America, televised gaming tournaments (online and offline) have been a million-dollar industry for decades. Gaming competitions have taken off particularly well in Korea, where there is enough money on the line for the government to investigate game fixing.
However, in America, a company like OnLive could also have the advantages of a Vegas casino. Websites like Virgin Gaming currently allow consumers to wager on the individual matches. In turn, the gamers themselves get prizes and potentially cash. Online betting is a dicey subject, as gambling laws vary from state to state. When I talked with Virgin Gaming at last summer's E3 gaming conference, however, the founders argued that the online betting was kosher because it was based on skill, not chance. OnLive has not announced any plans to start online betting, but it seems like a natural progression after live game broadcasting.
If OnLive were to get deeper into the sporting events arena, the focus wouldn't be on the hardcore players, but on the armchair warriors. Similar to the NBA, there are only a handful of professional gamers who pull down serious salaries through sponsorships, tournaments, and other ventures. OnLive would me more apt to take the Virgin Gaming route, allowing casual gamers to participate and reap rewards, but creating a system that recognizes and promotes the more skilled and serious players.
A second and equally valid money maker would be advertising. In-game advertising is already a large enough industry to merit its own agencies, but the main focus traditionally are passive ads, like the billboards you pass in a driving game or the clothes available for the hero of the video game. By shifting from playing to viewing, OnLive's ad play would be closer to Hulu than Halo -- and advertisements during "leanback" entertainment commands another tier of bucks.
Games can only be observed, not played, on the iPad, which makes the portable media player the perfect medium to experiment with the wager system as well as a new advertising model. It would be surprising if OnLive didn't dip into both by this time next year.
Photo courtesy of Robert Couse-Baker // CC 2.0
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