Meet the man in Microsoft’s rear-view by John Patrick Pullen @FortuneMagazine August 1, 2012, 4:47 PM EST E-mail Tweet Facebook Google Plus Linkedin Share icons Last month, Sony purchased one of your competitors, Gaikai for $380 million. What does this say about cloud gaming? It’s the thing we were really looking for. The console manufacturers, understandably, have not had great things to say about cloud gaming. For the most part, we have been up against trying to establish credibility for a new way of doing gaming. Then this comes along. Obviously we have a real system; we’ve got millions of users; we’re selling games and you can play for hours on end, with multiplayer spectating and so on. So we have a fully implemented game system, and then we add new things that no one’s had, like how these games work on mobile, massive spectating, the social features, et cetera. So, we have a really cool thing. The one thing we haven’t had — that we just got with this announcement — was a game console maker saying, “Okay, this is the future of gaming.” OnLive scored big with some same-day launched titles. When do you think the tipping point will come for streaming games? You’ll be seeing a lot of TVs and media streamers, things like Roku boxes, that play Netflix or Google TV. And you’ll be seeing Blu-Ray players coming out with OnLive built into them this fall. That’s the point where people are going to say, okay. So, not only will you have the micro-console, but you’ll also be available in other manufacturers’ devices? Vizio and LG have both announced that. And Google TV — we’re built into every Google TV. Ironically, that includes Sony but they’re unlikely to announce that. They have a little different agenda. They’re gently coming into this space, and they obviously have to be mindful of protecting their console. From Sony’s point of view, if it really is the case that you can stream an experience through television that is comparable to that of a console, then, the question is why do you need a console? Why do you need a particular consumer electronics maker to be the only way that you can get games? In the past year, you’ve rolled out with Android, attempted to put an app on iOS, and now you’re soon to be on televisions. OnLive also runs on set-top boxes like AT&T’s U-verse. Has your company covered a lot of ground in a very short time? We spread the spectrum…. Android covers a lot of ground on this. We have the tablets and kind of tablets with keyboards. There are phones with gamepads, like the Sony Xperia Play, that we support. Google TVs are coming out, which is covering a large number of manufacturers. We also work on set-top boxes. The U-verse set-top box is an example, but there are others. Then these media streamers are coming out. The Vizio Co-Star is a little box that hooks up to any TV. It’s $100 and it gives you Google TV; it’s very inexpensive. Vizio is the largest TV maker in the United States and they sell in WalMart, Costco, Sam’s Club, as well as through Amazon and other venues. So right there you’re talking about vastly more reach than what you get from a little micro-console branded with OnLive. We’re pre-loaded on that box, so once someone turns it on our icon is right there in front of them. MORE: The emerging market that could kill the iPhone Sounds like formidable platform. OnLive was also listed on a leaked Microsoft memo from 2009 as a threat and an acquisition target. That must have been pretty flattering, no? (Laughter) If I could tell you all the different rumors of purchases or acquisitions… It’s hard to comment on that. I guess if someone forged that, they did a pretty good job. We saw some sketches and it was fun to read. It wasn’t too bad of an analysis of the market. But, I think that a lot of people have seen us as a very bellwether technology, and see us as extremely strategic. We’re game-changers, figuratively and literally. But surely Microsoft has the pipes to be able to stream games too, so it was a curious to see that memo. There’s no question that OnLive could go and fit together with a number of different company’s strategies. As much as it fits in with company’s strategies it also disrupts company’s strategies, and so companies always have to balance that. It depends how large and how nimble the company is. We’re now the only non-captive technology at it. Before, we were the only one that had a product that people could buy games and play full games. Now, we’re the only player out there. So, you know, everyone is looking and saying, “This isn’t just an interesting thought experiment; this is a real technology.” Was that an acquisition rumor, or have you had offers? Every kind of acquisition of every sort has been put on the table, and through all these different things, very often the acquisitions turn into investments, because they’re not quite sure what to do with us. So, would OnLive be something that you’d be interested in selling off to Sony, Microsoft or Nintendo? You always have to see what makes sense for the company. We have investors and we have to worry about what makes sense for them, employees, et cetera. It’s my view that all great products come because there’s some driving individual vision or visions behind it. I mean, Apple is the poster child for that. And to keep incentives in place for people that are doing something which is truly groundbreaking is a very complex equation. I think after 10 years, people can say we’re not a pop-and-top company. But it is also the case that we’re not just the next generation of consoles. You can distribute movies through us. You can distribute the entire user interface around the movie, not just the movie itself…. We have this huge market in enterprise. The game market is a $60 billion market. The enterprise market is about $120 billion market, and then there’s small- and medium-sized business, there’s the consumer, education, there’s all these other markets, point-of-sale, and so on. The applications of this technology are vast, and so in some ways we’ve created something which is too broad in scope for most companies to wrap their heads around in the sense of where it relates to their business — both in the positive and how it threatens them…. Sony helps a lot with that, because if nobody has big backing, then the large companies kind of stand back and say, “All right, we don’t need to do anything, and maybe these guys will actually fade away.” But once someone’s thrown the gauntlet down and said, “We’re getting behind this thing,” then the risk equation changes. It’s less about “let’s hope this doesn’t happen,” and more about “let’s hope we don’t get left behind.” Speaking of being left behind, OnLive’s app has been pending approval with the Apple App Store for about six months. With the portrait that you just painted of all of the different areas OnLive is functioning, how frustrating has that been? Every platform you try to move into has challenges that you’ve got to deal with. For everyone it’s a different negotiation. There’s different things, they’ve got different priorities, and you’ve got to work for all of them. Sometimes the people you want to work with are on vacation or they have an issue they’re dealing with that is really bogging them down. You never know. We had a television ready to ship and the manufacturer stopped making the chip that was inside it, and so the TV maker couldn’t ship the product. Okay, well how do you anticipate that? So, you know, that is just one of the shoals that we have to get around. MORE: Autos: The 2013 new model smackdown Have you spoken with Apple about your app? We have spoken with Apple extensively and we’ve gone through the approval process. Like every other company that goes through the approval process, you generally don’t want to go and share any details about that, other than to say that you’ve had discussions with them and you’re trying to work things out. Apple has their standards they’re trying to maintain, they have their point of view. Ultimately we have to go and work within that framework. We’re doing the best we can. They’ve approved other apps. The OnLive Viewer is there, and you can watch games. We have OnLive Desktop and you can use it with your desktop…. It’s very complicated, and the best you can do if you’re walking into the world with something that’s brand-new, is be patient and make headway where you can make headway, and stick around and wait if you can’t. Do know what the issue is that’s holding up the approval? The honest answer is we really don’t. We do know that it has not been approved, though. So, it’s complicated. There’s no real obligation for them to go and specifically identify or be consistent in how they approve things. You do the best you can. Do you think that it will happen? I hope so. I don’t know. We’re trying our best and it’s the world we live in. Sometimes the Beatles don’t approve Apple, sometimes Apple doesn’t approve somebody else. You hope that eventually you get over the hump.