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Steve Perlman OnLive DICE Presentation

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Slides from Steve Perlman's "Instant Gratification" presentation at D.I.C.E. on February 18, 2010.

Slides from Steve Perlman's "Instant Gratification" presentation at D.I.C.E. on February 18, 2010.


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  • 1. Page 1
    February 18, 2010
  • 2. Instant Gratification
    Video Games in the “Now” Era
    Steve Perlman
    Founder & CEO, OnLive
    Page 2
    February 18, 2010
  • 3. Welcome to the “Now” Era
    All media
    what you want
    when you want it
    where you want it
    instantly delivered…NOW.
    February 18, 2010
    Page 3
  • 4. We’re Already There
    “Real-time entertainment traffic has exploded.”
    “26.6 percent of total traffic in 2009, up from 12.6 percent in 2008.”
    “Massive shift in behavior from … ‘download now, use later’ content acquisition to an on-demand mentality.”
    “Bytes are consumed as they arrive.”
    “Almost two-thirds of all Internet traffic in 2009 is enjoyed on arrival.”1
    February 18, 2010
    Page 4
    1Source: SandvineBroadband Phenomena Report, 10/26/09
  • 5. Music, Video/Movies, then Games
    Music became the first “Now” media
    Industry was unprepared: Devastated the business
    Videos/Movies in the midst of transition to “Now”
    Industry struggling to redefine itself
    So far, losing ground and no clear path
    Videogames just starting transition to “Now”
    Starting to feel the effects
    February 18, 2010
    Page 5
  • 6. Old Think: a Device Defines Media
    Physical device tied to the experience
    “What CD is playing?”
    “We’re watching a DVD tonight.”
    “Improve your grades or no more XBox!”
    February 18, 2010
    Page 6
  • 7. New Think: Experience Defines Media
    Music
    “It’s a track from a new Paramore-like band.”
    Could be from Pandora, iTunes, Amazon, pirate sites, etc.
    Unlikely from a CD
    Video/Movies
    “Did you see the new Tina Fey Sarah Palin skit?”
    Could be from YouTube, Hulu, nbc.com, pirate sites, etc.
    Unlikely watched on live TV
    February 18, 2010
    Page 7
  • 8. Media of the Moment
    Music, video/movies (“linear media”)
    Physical media in rapid decline
    Interim growth in rentals (Netflix, redbox)
    Downloaded media past its peak
    Even BitTorrent on the decline
    Streaming media now majority of all Internet traffic
    YouTube, Hulu, Pandora, etc.
    February 18, 2010
    Page 8
  • 9. Online Linear Media Hard to Monetize
    Online linear media a loss-leader business
    iTunes/App Store “a bit over break even”1
    Apple makes its money selling hardware and software
    Netflix charges zero for online video
    Netflix makes its money mailing DVDs
    YouTube continues to lose money
    Google makes its money selling search ads
    Pirated linear media widely available
    YouTube infringement a game of “Whac-A-Mole”
    Hard to compete with free
    February 18, 2010
    Page 9
    1Source: Apple CFO Peter Oppenheimer, 1/26/10
  • 10. What about “Now” Games?
    Videogames a different beast than linear media
    Large file needed before game can start
    Tied to specific playback devices
    Online games can’t be pirated
    Still, videogames subject to consumer attitude shift
    Used games continue to grow (about 1/3 of U.S. games sold)1
    Clearly, consumers not tied to physical media
    Flash, iPhone provide near-instant experience
    Generally, far less value than console games
    As broadband speeds increase, piracy will increase
    Pirate downloads always grow much faster than legit downloads
    February 18, 2010
    Page 10
    1Source: Wedbush, ‘Money for Nothing’ Interactive Industry Report, 7/09
  • 11. Monetizing Games in the “Now” Era
    Give consumers what they want
    Instant game play of high-quality games
    What they want, when they want it, where they want it
    Eliminate need for pricey, specialized hardware
    Focus consumer on the game, not the client device
    Offer game experiences in smaller “bites”
    Episodic, short-form, events, etc.
    Utilize Internet to mitigate piracy, used games
    Design games to require online connection
    February 18, 2010
    Page 11
  • 12. OnLive
    Game Platform for the “Now” Era
    Page 12
    February 18, 2010
  • 13. What is OnLive?
    Instant-play video games
    Latest high-end titles
    Instantly available for play
    Available on any device
    TV, PC, Mac, Phones, Tablets
    No high-end hardware needed
    Cloud-based gaming
    Unprecedented performance
    Never needs upgrading
    February 18, 2010
    Page 13
  • 14. OnLive MicroConsole™
    Page 14
    World’s most powerful game system
    Always state-of-the-art
    Far lower cost than current consoles
    Connects TV to OnLive Service
    Ethernet in  HDMI out
    Wireless/wired input devices
    HDTV/surround sound
    February 18, 2010
  • 15. OnLive MicroConsole™ Interfaces
    USB Source x 4,
    Bluetooth,
    Low-latency Wireless
    1/8” L/R
    Analog
    Ethernet
    HDMI
    480p,720p, 1080i
    5.1, L/R
    TOSLINK
    5.1, L/R
    S-Video, Composite,
    L/R
    Component
    480p, 720p, 1080i, L/R
    Page 15
    February 18, 2010
  • 16. OnLive Architecture
    February 18, 2010
    Page 16
  • 17. OnLive Video Compression
    OnLive interactive video compression
    Eliminates high latency inherent in linear video compression
    QuickTime, Flash, Windows Media way too slow
    Works reliably on home broadband connections
    Years of testing at 1000s of locations
    Bandwidth requirements
    SDTV: 1.5 Mbps
    >71% of US Homes have 2 Mbps or higher1
    HDTV: 5 Mbps
    >26% of US Homes have 5 Mbps or higher1
    February 18, 2010
    Page 17
    1 “Improving Performance on the Internet”, Communications of the ACM, Feb. 2009
  • 18. OnLive data centers: 1000-mile reach
    Page 18
    February 18, 2010
    Key inventions assure direct routes through Internet
    Provide minimal, predictable latency
  • 19. OnLive Demos
    February 18, 2010
    Page 19
  • 20. Community Built into the Platform
    Community features
    Friends, clans, teams, rankings, ratings,leader boards, ladders, tournaments,lobbies, matchmaking and more…
    “Virtual Living Room” shared experience
    Enabled by fast server-to-server network
    Communications and personalization
    Ubiquitous voice chat, messaging
    Customized pages, video profiles
    Loyalty programs, recommendations
    February 18, 2010
    Page 20
  • 21. Games Market Ripe for OnLive
    Reliant on retail/packaged goods
    Only digital media without effective online distribution
    Highly inefficient, static ecosystem, weak economics
    Piracy and used games draining publisher and console revenue
    OnLive breaks the console cycle
    Removes hardware and physical media from the equation
    The “Now” Era for video game systems
    On demand, no upgrades, no platform transition, state-of-the-art
    February 18, 2010
    Page 21
  • 22. OnLive Publisher Advantages
    Same SKU runs on TVs, PCs, Macs
    Minimal port of PC SKU
    No platform transitions
    No piracy, no used games
    Much better margins
    Telemetry
    Day-by-day, user-by-user
    Live Beta testing on-demand
    February 18, 2010
    Page 22
    Announced OnLive Publisher Partners
  • 23. OnLive Consumer Advantages
    Any game, any time, anywhere
    Instant demos—try before you buy
    Unprecedented performance
    Community
    “Virtual Living Room”
    Flexible value proposition
    Demo, rent or buy
    Never upgrade again
    February 18, 2010
    Page 23
  • 24. OnLive SDK
    Adapts PC SKUs to be compliant with OnLive service
    Optimizes performance
    Higher quality on slow Internet connections
    Faster responsiveness
    Instant game loading
    Access to OnLive community features
    Spectating, chat, leaderboards, etc.
    February 18, 2010
    Page 24
  • 25. Economics
    February 18, 2010
    Page 25
  • 26. Retail vs. OnLive Economics
    February 18, 2010
    Page 26
    Retail
    Potential Spend $84
    $12
    Piracy
    Actual Spend $72
    Used Games
    $12
    OnLive Share
    MSRP $60
    68% of Potential Spend
    Retailer Margin
    $15
    Wholesale (WS) $45
    $7
    Returns/PP/MDF
    $4
    Distribution/COGS
    $7
    Platform Royalty
    Publisher GM $27
    Publisher Share
    Publisher
    Gross Margin
    32% of Potential Spend
    $27
  • 27. OnLive Roadmap
    February 18, 2010
    Page 27
  • 28. Beta Program
    Started External Beta 9/09
    100s of thousands of Beta sign-ups
    Initial objective: compatibility testing
    Positive feedback to date
    Ramping new server deployments
    Scaling Beta as approach launch
    Launch details to be announced soon
    February 18, 2010
    28
  • 29. Thank you.
    Page 29
    February 18, 2010