Will OnLive be the decider in Sky TV v Virgin media content battles?

According to this story at the always excellent Kotaku, OnLive is a facility that lets any machine (more or less) play the latest games. The trick here is that our broadband connection does all the work – cloud computer gaming.
Now, imagine such a device squeezed into your Sky or Virgin set-top box.

As the article puts it:

The concept is simple. Your controller input isn’t going from your hand to the controller to the machine in front of you, it’s going from your hand to the controller through the internet to OnLive’s machines then back again as streamed video. Whether you’re using a USB gamepad, Bluetooth wireless controller, or tried and true keyboard and mouse, the processing and output happens on OnLive’s side, then is fed back to your terminal, with the game “perceptually” played locally.
In other words, it’s cloud computed gaming.
Using patented video compression in tandem with algorithms that compensate for lag, jitter and packet loss, OnLive delivers video at up to 720p resolution at frame rates up to 60 frames per second. Of course, the quality of the video feed relies on your connection.
For standard definition television quality, a broadband connection of at least 1.5 megabits per second is required. For HDTV resolution, a connection of at least 5 mbps is needed.

If I was a content provider like Sky or Virgin in the UK, I’d be on the phone to these guys right away as this could be the new football but for kids, teens and solo flat dwellers (actually, it’s for everyone except mums).

Now, if you’re a company with an already decent infrastructure (and it pains me to praise Virgin because their customer service is terrible, but there’s no alternative where I live – damned if I’m paying BT £125 to reconnect me to their network) this is a double winner as it lets you offer more gaming (and more than one set-top box in each house – kids will want one each in their own rooms) and a high-speed web connection.

But what’s in it for the gamemakers? On the one hand you have the loss of console sales – unless the console makers go for this as well (not beyond the realm of possibility) – but for PC games, this could be fecking massive – no distribution or manufacturing charges, harder piracy (if the set-top box is a closed system), but you could have various charges for owning a game for a night, a week, a month, for eternity.

What’s in it for the customer? Tons of games while gaining space from household clutter (no need for a console in the living room) and potentially some cash savings compared to what the house spends now on games.

Someone else who would be onto a winner: any company that managed to sell add-ons for games like a tennis racket, sniper rifle and so on…

Really wild thought: could we see a company with an interest in you staying at home – Domino Pizza for example – meeting the cost of these boxes as part of some promotional activity?

Anyway, as we reach channel saturation with HD and 3D being the things touted at us for TV (most people I know with a HD telly bought it to save space in their living room, not for the content) it may well be that the old chestnut of games is actually what helps decide the content provider wars.

(The story’s on Wired and Ft.com/techblog as well)