A blog post from OnLive sheds a lot more light on the Sony deal : A Bright Future for Cloud Gaming at Sony. The post also confirms my thoughts that it’s unfair to paint Sony as the evil corporate villain in all of this, because there are some cold hard facts about the viability of the business are explained in the blog post.
One important point to note is that the blog post suggests that OnLive were indeed looking for someone to purchase them, and this section of the blog post spells out the situation quite clearly :
Since 2012, the company has dramatically improved its technology and business models such that all of its 5 services are gross margin positive, ranging from 43% to 86% margin. The fact that we had such positive margins should prevent repeat speculation that we were “crushed by infrastructure costs.” The company also was able to achieve conversion rates from free trial to paid of between 64-78% for its services. Despite these positive metrics, the lifetime value (TLV) of a subscriber was still less than the cost to acquire subscribers (CPA), but they were converging. While we knew we could not get to break-even on our own, we believed that there were many large companies who would be able to get there due to: 1) being able to communicate broadly and inexpensively (lowering CPA), 2) having their own distribution platform for the service, and 3) being able to license the most popular games and MMO’s, the latter 2 would have had the effect of both reducing CPA and reducing churn (thereby raising TLV). Despite these positive developments, we were unable to entice an acquirer who wanted to continue the service, and Sony already had their own service.
Therefore OnLive were seeking assistance in terms of breaking even and whereas some of that assistance could come from companies such as Linden Lab, they needed more companies to jump aboard the ship to make this project viable in the long term.
Step forward Sony. Unfortunately for us SL Go users and those who use OnLive Desktop, Sony have absolutely no need for a streaming service, as they are already running one in the shape and form of Playstation Now.
Continue reading “Scepticism Of Cloud Gaming May Be The Real Reason SL Go Is Closing”