Sony Buys OnLive Cloud Gaming Service and Shuts It Down

For a brief, shining moment, OnLive was the leader in cloud-based game streaming. At the end of this month, the service will be but a distant memory.

Sony has officially purchased the company that effectively put game streaming on the map, taking control of all assets and shutting it down. OnLive will cease operations on April 30.

Any existing OnLive subscriptions renewed or purchased after March 28 will be refunded. Subscribers who bought games through OnLive will still have access to those titles on Steam.

This is effectively the second time OnLive has been shuttered. In 2012, the company underwent a major restructuring, in which it abruptly terminated most of its employees after company founder Steve Perlman failed to raise much-needed capital. (Perlman would soon leave the company.) Stories soon emerged that the company had just 1,600 concurrent users.

OnLive’s 2012 problems came right after Sony had bought its chief rival, Gaikai, whose technology went on to power Sony’s own cloud-based game streaming service, PlayStation Now.

While Thursday night’s announcement of the OnLive purchase and shutdown might make it seem as if Sony is simply eliminating a rival, there’s another way to look at this. Sony may very well be doubling down on streaming with an eye to the future.

OnLive didn’t have the customers, but its technology was considered ahead of its time. The purchase gives Sony control of all OnLive’s patents, preventing Microsoft, Apple, or any other competitor from using them to create a competing Netflix-like all-you-can-play service.

“These strategic purchases open up great opportunities for our gamers, and give Sony a formidable patent portfolio in cloud gaming,” said SCEA VP Philip Rosenberg. “It is yet another proof point that demonstrates our commitment to changing the way gamers experience the world of PlayStation.”

PlayStation Now is something of a hot mess right now. The prices aren’t quite at the sweet spot ($15 to $20 per month, versus $10 to $15). The software selection is limited, and the games on offer aren’t the classics most PlayStation fans are hoping to play.

But at this point, the service doesn’t have to be perfect. It’s very much an experiment. The escalation of broadband speeds and the changing whims of players could make cloud-based game streaming a significant revenue source for consoles in the years to come. And now Sony has a lock on the early patents in the space. That’s a good place to be.

Sony’s certainly not the only game company exploring cloud-streaming technology. Nvidia has put great effort into its game-streaming Grid technology in the past few months, even making it a key component of its revealed Nvidia Shield console.