Why SL Go won’t continue, and OnLive opted to sell

Farewell SL Go; one of OnLive's most successful services, but nevertheless one unlikely to be saved
Farewell SL Go; one of OnLive’s most successful services, but nevertheless one unlikely to be saved

Since the announcement that OnLive’s gaming services are to shut down at the end of April, there has been understandable upset from within the SL community (and from some OpenSim users as well, given Firestorm on SL Go can be used to access OpenSim grids).

Following the news, there were a plethora of requests made to Sony on social media that they continue to provision SL Go as a service and an on-line petition was started in the hope of achieving the same end. Unfortunately, these requests and the petition overlook one thing.

As OnLive made clear in their statements on the future of their gaming services, and as I attempted to point to in my original article on this news, Sony didn’t actually acquire OnLive’s services. They took the opportunity to purchase the IP and 140 patents the company held relating to cloud gaming and other “assets” (which would most likely appear to be the additional 135 patents related to cloud gaming  OnLive had pending), without actually buying OnLive’s services. So technically, there’s nothing for them to “continue” to offer SL Go users.

What’s more, as Dennis Harper, the SL Go Product Manager at OnLive, made clear in these pages, taking the IP and patents is akin to taking the heart and lungs of OnLive’s services; without them, a service like SL Go cannot easily be continued by someone else. At least, not without money changing hands and someone having the infrastructure by which they can deliver the service.

So, are Sony the Big Evil for doing this? did they gobble OnLive’s patents to stifle competition? Is this, as was dramatically stated in some quarters as the news broke, some kind of first shot in a forthcoming “VR battle” between corporations? Well …. No.

From the start, OnLive was well ahead of the curve, and even though we're reaching a point were the viability of cloud-based gaming can be demonstrated, it seems few are yet willing to take a gamble on taking-on the kind of services OnLive have offered
From the start, OnLive was well ahead of the curve, and even though we’re reaching a point were the viability of cloud-based gaming can be demonstrated, it seems few are yet willing to take a gamble on taking-on the kind of services OnLive have offered (image courtesy of OnLive)

The truth is that OnLive put itself on the market.

That this is the case can be found in another post on the company’s blog entitled, A Bright Future for Cloud Gaming At Sony. As well as containing useful historical information, the post underlines the specific issues the company’s management had been forced to face:

Since 2012, the company has dramatically improved its technology and business models such that all of its 5 services are gross margin positive, ranging from 43% to 86% margin … The company also was able to achieve conversion rates from free trial to paid of between 64-78% for its services. Despite these positive metrics, the lifetime value (TLV) of a subscriber was still less than the cost to acquire subscribers (CPA), but they were converging. While we knew we could not get to break-even on our own, we believed that there were many large companies who would be able to get there.

In other words, in order to get to a break-even point,  OnLive’s management felt the company needed to be offered-up for acquisition, albeit hopefully as a going concern.

Perhaps the first fully public hint that this was the case may have actually come in a blog post issued a couple of days ahead of Sony deal being announced. Of course, by the time the post appeared, the deal was undoubtedly cut and dried; nevertheless, The 2015 Case for Cloud Gaming and OnLive, could almost read as the company laying out its stall in order to attract a suitable investor / acquirer.

Despite the fact the Nvidia suggested OnLive themselves were helping to lift cloud gaming out of the Trough of Disillusionment towards its Plateau of Productivity, no-one was interested in acquiring the company as an operational concern when OnLive decided to seek outside assistance (image: Nvidia via OnLive)
Despite the fact the Nvidia suggested OnLive themselves were helping to lift cloud gaming out of the Trough of Disillusionment towards its Plateau of Productivity, no-one was interested in acquiring the company as an operational concern when OnLive decided to seek outside assistance (image: Nvidia via OnLive)

Unfortunately, despite all the positive indicators they could show, the Cloud Gaming hype cycle had bitten hard; no-one OnLive approached was willing to take them on as a going concern. Not even the fact that Nvidia had indicated the worst was behind the sector, and that OnLive itself was helping to push the technology up the Slope of Enlightenment, could encourage anyone to acquire the company outright. Thus the deal with Sony for the IP and patents sale was agreed.

Why didn’t Sony acquire OnLive as a whole? Because they already have their own cloud gaming service, PlayStation Now, which came out of a 12-month beta programme in January 2015. The OnLive patents understandably offer more value when put to work within PlayStation Now than Sony would be liable to find in buying-out OnLive as a whole, so they didn’t bother.

Interestingly, and entirely coincidentally, PlayStation Now has its own link to Second Life. It is built on the back of Gaikai, a Japanese streaming game provider acquired by Sony in 2012. Gaikai is the company Linden Lab worked with in an attempt to provide the means of streaming Second Life to web browser, a service which underwent a limited beta run in 2010, as the video below demonstrates.

But to draw things to a close; however “unjust” it might appear, all of this means that SL Go cannot really be saved. The patents which enabled it to function are gone, and the services upon which it runs are closing down. The only real options are for someone else to come along and offer a similar service of their own, or for LL to work with a partner to provide such as services, as they once attempted with Gaikai.

Both would seem unlikely; in the case of the former, SL perhaps represents too small a community of users to be worth catering for (and remember, SL Go came about in part as a result of rather unique circumstances). And while I tend to lean towards LL having an interest in cloud-based streaming, I don’t think that interest is with regards to Second Life, so I can’t see them getting directly involved in trying to provide a streaming solution for SL access. If nothing else, they’ve likely got enough on their plate already.

SL Go was a great and brave experiment. It is a shame that its days are drawing to a close; but OnLive, through their services as a whole, have proven what might be achieved. In that respect, they are right when they proclaim that cloud gaming has a bright future.

15 thoughts on “Why SL Go won’t continue, and OnLive opted to sell

  1. I agree, but there are several existing options for continuing “something like SL Go”. One I find intriguing is from Nvidia, a ready to go rack of servers that will handle over 400 users. Not that I really believe that LL would go that direction but it would be nice, and having the servers all in the same room would make sense.

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    1. Yup. The potential for another streaming service supporting SL is possible – just, to me, very, very unlikely. Most companies seem to regard SL as a niche, closed market lacking any broad-based appeal. In many respects, they’re not wrong (which is not to say they’re right, either); thus it comes down to a cost / benefit analysis in terms of provisioning the service and the likely return they’ll gain from it.

      OnLive had several advantages when they started SL Go. Firstly, it was something their former Chairman (and the man responsible for “rescuing” them following the “original” OnLive’s collapse in 2012) wanted to see happen. He saw SL as an environment where OnLive could establish an additional footprint as they strove to build their market presence. Secondly, OnLive proved themselves flexible enough (and perhaps small enough) to take the time to get really involved with SL users, hear there requests / demands, seek to respond to them, take lessons from other TPV groups (notably Firestorm), and continually seek to refine and improve their service in line with users expectations, to provide a very tailored service. I’m not sure a major company in a position to supply the necessary infrastructure for a similar service would be willing to be so accommodating to what amounts to so small a potential user base. Again, it’s the cost / benefit thing, albeit one with an additional tilt: it could end up costing the supplier more while only benefiting the users.

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  2. In the last few years linden lab has spent millions on companies that did not directly benefit residents,then sold them off or closed them,when one company did, they did not buy it..wasted the opportunity not just for us but for the new platforms as well.
    as much as i like Ebbe.. i do think someone in that office blew it for the residents.

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    1. I’m afraid I can’t agree.

      Whether or not the acquisition of the likes of Desura, Blocksworld and Little Text People (Versu) did anything “for” SL at the time is debatable, for sure. However, as you point out, one of those acquisitions (Desura) was later sold (the Bad Juju Games), and it is entirely possible this sale either allowed the Lab to at least recoup its initial costs in obtaining Desura, or to have possibly walked away from the deal having made something on it. If either of these is the case, than the money may well yet benefit SL, if it hasn’t done so already.

      Similarly, Blocksworld is generating what the Lab refers to as a “comfortable” revenue stream. Whether this is enough to offset the cost of acquiring the three guys behind the title and completing its development, etc., and covering on-going costs associated with it, we don’t know. But if it is sufficient to put the game into profit – again, we have no idea as to how the profits (as small as they could well be) might be put to use to benefit Blocksworld, SL or the Next Gen platform.

      In terms of LL somehow acquiring OnLive – assuming they were even interested in taking over a set of services pretty far removed from their core business, and thus unlikely – consider this.

      While we have no idea what OnLive were asking in putting themselves on the market, we do know from the blog post I’ve linked to in this article, that they believed themselves to be worth “at least” the amount Sony paid for Gaikai in 2012 – US $380 million. However you cut, it, and again assuming the Lab were interested, that kind of price tag would likely be somewhat out of their reach.

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  3. I used SL Go and loved it. I would like to think that another streaming service would come along or that LL would entertain the idea, but since Sony now has the IP and patents, anything that remotely even LOOKS like SL Go will draw the inevitable lawsuit. This seems to be the mantra of the Samsungs, Apples, Microsofts, and Sonys of the world. Just buy the IP and sue, sue, sue.

    So unfortunately, it looks like OnLive shot themselves (and the rest of us) in the foot. Sigh. Let’s hope that Linden Lab continues to innovate and won’t be enticed to march down this shortsighted (and obviously deadly) path.

    I don’t know if this is related, but I read a story yesterday about Playstation Home (Sony’s answer to Second Life) shutting down (http://www.engadget.com/2015/04/04/rip-playstation-home/). The timing is interesting. I am not a Sony or Playstation fan, so I didn’t know about Home or Now – but do find it interesting that Sony is shifting interest from the creation of its own virtual world to possibly streaming already profitable content into one.

    As always, a great post! Thanks for keeping me up on all this – you are an amazing (and hardworking) source of information.

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    1. “since Sony now has the IP and patents, anything that remotely even LOOKS like SL Go will draw the inevitable lawsuit.”

      Which is a valid point.

      Glad you liked the article, and thank you, as always, for the feedback 🙂 .

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  4. Linden still has to face the fact that with every hardware bump that is required the number of users that can become paying customers is smaller.

    A SL go type service where you could enjoy better images , no lag ( the blurry every once in a while didn’t bother me) on a tablet then you ever hope on a desktop was powerful.

    Will the next SL be able to serve the tablet market?

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    1. Yes, the Lab is planning on supporting mobile devices such as tablets. From Ebbe Altberg’s opening keynote at this year’s Virtual Worlds Best Practice in Education conference:

      “But we want to think about mobile as something we can support form the beginning; but again, the number of platforms across mobile, PCs and VR … [there’s] more and more of them. so it’s tough to keep up. So we are building a next generation platform from the ground up to make possible for us to take advantage of all these different platforms.”

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      1. See, I find that more worrisome than hopeful- an SL that runs on tablets seems like it couldn’t possibly be as realistic unless they’re planning to offer it as a streaming service much like SLGo was. Mobile devices simply don’t have the graphical power to push the kind of high-res detail we’re getting used to in the current SL. If the next incarnation of SL looks like IMVU or the Sims 4 with their cartoonish graphics, I won’t be at all interested.

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        1. From what the Lab has said about the next gen platform, it sounds as if it will be highly optimised for streaming. As to how things look – too soon to start speculating.

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  5. Services such as SL Go aren’t going to go away and I’m not sure which patents Sony have purchased but there’s still plenty of room for people to use virtual desktop infrastructure as a service, see VMWare for an example.

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    1. “I’m not sure which patents Sony have purchased”

      From the indicators going around, the answer seems to be “all of them”. 140 that OnLive had obtained and (most likely) the 135 they had pending, plus the associated IP. That’s unlikely to mean that Sony have cornered the Market in cloud gaming, but as Raven points out, and assuming the market does take off, it could be sufficient for their legal team to start acting aggressively towards any services perceived to be encroaching upon their turf within the marketplace as a whole (rather than specifically in terms of an SL Go-like service).

      In terms of SL and other streaming services offering a similar solution to SL users, again, I agree the door isn’t shut; the problem is, as already mentioned, whether or not the revenues it is likely to generate are seen as sufficiently attractive to overcome the costs involved in developing and maintaining a service which may only appeal to a small sector of what may already be regarded as a small, niche market.

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  6. A virtual world that delivered content *only* through server-side rendered streams would prevent illicit copying of in-world content. Externally-sourced IP could still be infringed, so it’s not a panacea, but enough creators might value the protection of their content enough to differentiate the platform for consumers, too.

    As much as SSR reduces the client hardware barrier, it increases network bandwidth needs, so that’s a different challenge to platform adoption.

    Naive question: Has anyone tried SSR with Oculus- Vive- Morpheus-like stereo vision headsets? I’m (only) guessing the round-trip control lag makes that hopeless; if so, the SSR market must be disjoint from that of VR, now at peak hype.

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