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OnLive

A slumbering giant appears to be stirring in the video game industry -- and that could be bad news for Microsoft and Sony.

After quietly sitting on the sidelines for the entire console war, the television industry is starting to get into the fight. Vizio
announced plans this week to integrate the OnLive game streaming service into
all of its 2011 HD TVs and Blu-ray players, as well as forthcoming smart phones
and tablets from the company.

That could prove to be a monumental shift in gaming, as it removes a big barrier for people who have been sitting on the console fence. Now, in order to play the latest triple-A games, they won't need to shell out several hundred dollars for a specialized gaming system. They can simply turn on their TV.

Like the streaming services offered by Netflix and Hulu, OnLive depends on cloud computing to deliver games to customers. Games are stored and played on its centralized servers and pushed to users via a broadband connection. When players press a button on their controller at home, that action is transmitted virtually instantaneously to the game and reflected on screen, meaning that just about any screen with a decent Internet connection can be transformed into a high-end gaming system.

The company offers a variety of payment methods, ranging
from a la carte purchases to an "all you can eat" model for slightly older
titles.

Though OnLive launched a standalone set-top box last month,
the deal with Vizio will give the company a much wider presence in people's
homes. The manufacturer boasted sales of $2.5 billion in 2009 and its TV
segment holds a significant share of the U.S. LCD television market.

And even if people don't flock to OnLive initially, the
service will be embedded in their sets for as long as they own them, which
increase the chances they might try it out at some point.

"For the first time in the history of video games, consumers
will be able to enjoy premium video games directly on a TV, no console or
computer needed," said OnLive founder and CEO Steve Perlman.

OnLive is the biggest game streaming service to sign a deal
with a television manufacturer, but it was hardly the only one this week.

Oberon Media, which specializes in casual games (a different
market segment than OnLive), announced Tuesday it had secured the exclusive
rights to bring the classic game Tetris to connected devices, including TVs. On
Wednesday, the company announced its i-Play TV service would be included among
the options on 2011 Panasonic TVs.

That means the company's exclusive franchises, which include
"Dream Day Wedding" and "Bubble Town," along with casual
standards such as "Solitaire" and "Texas Hold'em" will be available to couch
potatoes.

No rational person, of course, is sounding the death knell
for consoles at this point. It is, after all, just the beginning of the
movement.

But the installed base of televisions is exponentially
larger than that of game systems. And if those users begin playing the games
that are offered to them through that device, it could have a significant
impact on the way the video game industry operates. Publishers could avoid the
high royalty costs console makers demand -- and, if streaming games becomes a
popular way to play games, it could hasten the industry's move towards digital
distribution.

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