Both OnLive and Gaikai use a cloud-computing approach in which game data is processed by an external server. The visuals are then streamed to players through a web browser plug-in, with their control inputs then piped back to the server.
Users of such services can play any games and applications on offer, regardless of how powerful their computer is or isn't, so long as they have a net connection.
The key problem is latency, one that OnLive claims to have solved through the combination of five data centers and its proprietary technology. Gaikai, meanwhile, claims to have servers at 300 data centers and 900 more servers going out to local ISPs.
As for how Gaikai's can afford such subscription-free aspirations, Joystiq explained:
Saying that Gaikai "isn't trying to be PlayStation 4 or take out the next Wii," [co-founder David ] Perry described (and demoed) the concept of embedding instantly playable games on any website. A publisher can, for instance, have a clickable pop-up appear when people are looking at one of its games on Amazon, which quickly launches an overlay window running the full game, with whatever time limit the publisher chooses. After this period, players can opt to buy the game for unlimited streaming, download it, or have a physical copy shipped to them."We are not in competition with any other streaming company or technology, our business model is entirely different," Perry explained previously. "People do not come to us to play games, they play the games right on the publisher's site. The publisher uses our technology to make it all possible. So from wherever you click, you end up on the publisher's site with the latest version of the game."