There hasn’t been a new competitor in the game console market in a long time. It’s a tough market to enter with companies like Microsoft, Nintendo, and Sony dominating the market for years. But recently a new company has emerged with a home console that takes a very different approach than the big three.

This company is OnLive and they caused a stir with their idea at the 2009 Game Developers Conference. They already launched their gaming service on PC and Mac, but does their home console strategy have what it takes to be successful? Click the link to read what I think OnLive should do to make your home console a success.

First, a little background

OnLive is actually more of a gaming service than any kind of hardware platform. Some have referred to it as a cloud gaming service or games on demand. The reason is because OnLive actually does all the game processing on its remote servers spread across the country. These servers do all the processing and then compress the video and audio and transmit it to a user’s machine.

The user has the OnLive software loaded on their machine which then decodes the video and audio stream into high definition video. All the user needs is a PC or Mac that can process HD video and an Internet connection in excess of 3 MBits / sec.

The selling point of Onlive to the user is that you will never have to worry about buying new hardware or upgrading it again. If they want to play the latest game, all they have to do is log into the software and purchase the game from the OnLive game store.

This service launched on PC and Mac in June 2010 and OnLive has also just released a home microconsole that sells for $ 99. The console is a little box that can decode audio and video streaming, and it also comes with a controller. wireless.

OnLive’s biggest problem

OnLive has a couple of problems. Many people have already pointed out that many people do not have 3 Mbit / sec Internet connections, much less the 5 MBit / sec connection that OnLive recommends. Also, its current game library is pretty meager. As of today, the OnLive game library only shows 40 titles, and 7 of them are different Borderlands editions and downloadable content.

But the biggest problem with OnLive is the model it uses to buy games. Users can buy games for slightly less than the PC retail price or rent the game for 3 or 5 days for $ 5.99 and $ 8.99 respectively. This price does not apply to all games, but represents the most and highest prices anyone will pay for the games listed.

Those prices are high enough to buy something you never really own. Even when you buy the full game, your copy of the game resides on the OnLive servers. OnLive has not communicated exactly details of what happens to games purchased by a user if they stop using OnLive or close. But the general consensus is that you won’t be able to get a digital or physical copy of the games you have purchased.

This method of purchase never suits consumers. People just don’t like to pay close to full price for something they never really own. For OnLive to make any breakthrough, they will have to ditch this model.

Someone has already discovered the solution.

The good news for OnLive is that a company has already found a solution to this problem. All OnLive has to do is follow Netflix.

OnLive needs to move to a subscription-based streaming model like Netflix. By setting up a tiered subscription model for OnLive, they will be able to attract more users. Users as a whole are already used to a model like this thanks to Netflix, and many people beg Apple to move to this type of model with music and video content from iTunes.

This is what I think OnLive’s subscription-based model should look like:

• $ 4.99 – 1 game per month
• $ 9.99 – 3 games per month
• $ 14.99 – unlimited games per month

I think those are pretty good price points for OnLive to start reaching mass market penetration. I also believe that the price is low enough to quell consumer fear and that the whole problem never gets hold of the gambling problem.

Also, ditch the hardware

Another thing OnLive can get out of Netflix is ​​stick with the software and forget about the hardware. Instead of Netflix making their own media streaming box, they decided to partner with the likes of Roku, Sony, Samsung, Boxee, Google, Apple, and others.

Netflix creates a streaming media application that they can install on a variety of hardware platforms from various vendors. This allows Netflix to gain a greater share of the market than they could if they decided to make their own hardware and sell it.

OnLive should do the same. They must install their software on the same type of hardware platforms as Netflix. Their software already has built-in support for the Xbox 360 controller for Windows, and if they really wanted to, they could produce their own controller as an accessory.

By doing this, users will be able to play their games on their televisions and PC / Mac without having to buy any additional hardware other than a controller. The best thing about this for gamers is that they will be able to access and play their games on multiple types of hardware.

Imagine starting to play a game at home on your television, but then finishing the game later in the week on your laptop while on a business trip. That’s a service that I imagine subscribing to for a long time.