Before I dive into what OnLive is and how it works, let me start by saying that you should read every word of this article as this service has the potential to completely change the way games are played. If it works and gets proper support from both publishers and gamers, you may never need a high-end PC to play the latest games, or perhaps even ever buy a console again. That is not an exaggeration.
Just announced at this year's GDC, OnLive is an on-demand gaming service. It's essentially the gaming version of cloud computing - everything is computed, rendered and housed online. In its simplest description, your controller inputs are uploaded, a high-end server takes your inputs and plays the game, and then a video stream of the output is sent back to your computer. Think of it as something like Youtube or Hulu for games.
http://uk.pc.ign.com/articles/965/965535p1.html
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