Gaming startups like OnLive, Trion, and Gaikai hope to revolutionize gaming and bring state-of-the-art games from the cloud to TVs and cheap netbooks. The idea: Cut out both expensive game consoles and retail middlemen, do the heavy lifting of rendering game graphics themselves, and then stream the output in hi-def anywhere.
There's already skepticism heavy-duty server-based gaming will work, technically. But the rising cost of Internet access could sink their business models too.
The problem: Internet service providers like Comcast (CMCSA) and Time Warner Cable (TWC) are experimenting with bandwidth caps. Comcast has a cap at 250 GB. Time Warner Cable is experimenting with caps and $1/GB overage charges in more cities this year.
OnLive, one such service, promises 720p video at 60 frames a second -- that could be around 2 GB per hour to play. If a gamer wants to play Grand Theft Auto 4 to completion -- more than 100 hours -- that's potentially 200 GB of data right there. That could translate to a significant overage charge. Compare that to current prices of $60 for GTA4 plus a console.
Then there's traditional distribution models: Publishers on Sony's (SNE) Playstation Network and Microsoft's (MSFT) Xbox Live both rely on free demos of their games to excite prospective buyers. But those demos run 1.4 GB -- not something to do lightly if overage charges are a worry. Same situation applies to web-based game distributors like Valve.
But the news isn't bad for all gaming companies: Traditional online games like World of Warcraft max out their connection at about 30 MB/hour, meaning WoW addicts and other online gamers can play all day long without worrying too much about their Internet bill.
