Steve Perlman, one of the original developers at Apple (NSDQ: AAPL) and founder of WebTV Networks, which was sold to Microsoft (NSDQ: MSFT) in the 90s, is trying to shake up the video-game business. Perlman's incubator Rearden LLC has developed technology that enables video-game players to play anywhere without a console by accessing games through an internet-connected server, something not currently available to gamers. The technology works a lot like many video-content delivery networks: It compresses then de-compresses large amounts of data quickly, which is necessary to play graphics-rich games that require fast two-way action. This is not Perlman's first foray into the gaming industryhe founded Catapult Entertainment in the '90s, which developed modems for Sega and Nintendo.
The technology had been in development for seven years, according to the Wall Street Journal, and is scheduled to be debuted by a company called OnLive Inc. later this year. OnLive says it will offer new games from Electronic Arts Inc. (NSDQ: ERTS), Take-Two Interactive Software (NSDQ: TTWO) Inc. and THQ Inc.. (NSDQ: THQI) For gamers who want to play games on their TVs while at home, the service has created a chip called the OnLive MicroConsole, which converts the internet feed to playback on a TV.
While the technology hasn't officially been used by any service yet, it potentially has significant implications for pretty much every aspect of the gaming industry. Companies like Sony (NYSE: SNE) and Microsoft could face a serious challenge to sales of their popular PlayStation and Xbox consoles as they theoretically wouldn't be necessary anymore. Meanwhile, if the technology delivers on its promise, publishers could cut costs fairly dramatically by not having to package and ship games.
By Rory Maher