The original pitch, as covered by Nick Breckon last March: http://www.shacknews.com/onearticle.x/57804

OnLive today announced plans to launch a new service that will stream PC games with negligible lag to televisions and PCs, eliminating the need for hardware upgrades.

Developed in secret for the past seven years, OnLive makes use of cloud computing, streaming video to your monitor at 720p resolution and 60 frames per second.

Because the video is rendered in a "cloud" of servers, games such as Crysis are delivered at full graphics settings, the only bottleneck being the user's internet connection. 1.5 megabits per second will get you to standard definition, while a 5 megabit connection bumps the resolution to 720p.

OnLive's proprietary compression technology boasts a lag time of less than one millisecond in testing, and early reports indicate that the service delivers on this front. Gamasutra notes that OnLive has worked directly with cable and internet providers to eliminate packet loss.

...and then CNet doing an interview with OnLive CEO Steve Perlman last week: http://news.cnet.com/8301-17938_105-20010687-1.html

"Anybody that's a serious gamer plays games in more than one place. If you're a hardcore gamer and you've got a big rig and you want the highest quality graphics than OnLive is not the place where you're going to play your high-end game. Then again, to not have a huge download in order to trial something before you make the purchase decision, why not? Just click OnLive and give it a go. If you like it, terrific. Download the thing from Steam or order a copy on DVD."

I knew back then that OnLive wasn't going to really be able to provide the same experience as a $1600 gaming PC, even though the marketing copy from spring 2009 made it sound like it would make the gaming PC obsolete. After people actually tested it this year and started noticing that there are video artifacts and lag, and that the value proposition was questionable, it seems that OnLive has backed off of the marketing a bit.

I agree with Brian Leahy's statement on last Friday's Weekend Confirmed that the target market for OnLive seems pretty small. I'm also doubtful that OnLive will supplant PC game demos (the very very few demos that are made available before the retail release), as their current game catalog looks a bit dated by current standards: http://www.onlive.com/games/featuredgames