OnLive pricing could stunt growth, says analyst

By Patrick Garratt

Signal Hill’s Todd Greenwald has warned that a small install base and expensive pricing model could stifle Cloud gaming service OnLive’s growth.

“While we find the service compelling and exciting, we are somewhat sceptical that OnLive will really turn the gaming world upside down any time soon,” said Greenwald in a note, following confirmation at GDC this week that OnLive will launch in June in the US, price $15 a month.

“While OnLive enables users to forgo spending $300 on a console, the $15 per month fee adds up to $180 per year, or $360 over 2 years. Additionally, we believe the target audience for OnLive (hardcore gamers) really values the packaged good disc version of a game, which allows them to quickly re-sell a title in the used market and gain back $20-30 of the $60 purchase price.

“If publishers try to sell digital-only new release games at a $40-50 ASP (average selling price), we don’t think gamers will find the price points compelling,” he said.

OnLive’s date and price announcement for the US was one of GDC’s bigger stories this week, although hidden away in the excitement was the fact that 1080p60 performance, one of the main selling points of OnLive’s original GDC announcement last year, won’t be available until 2011.

Don’t panic though, Americans: Mark Rein likes it.

There’s no date for Europe as yet.

Thanks, GI.