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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.

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Steve Perlman OnLive DICE Presentation

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