A novel non-linear compression technology accelerated by massively multicore ASICs is at the heart of the OnLive service. Each of the company's servers includes a proprietary 100-plus core encoder.
Perlman, who helped develop the QuickTime compression technology at Apple Inc., said OnLive's approach represents a ground up rework of current techniques. "That's one of the things that has taken us seven years," he said.
The encoder ASIC does not use an array of homogenous cores. Instead it has a wide variety of dedicated blocks, each handling a small piece of the compression algorithm.
The distributed compression technique uses Internet Protocol multicasting so that as many as a million viewers could watch a single game in progress at full resolution, Perlman said. It can deliver content without perceptible latency for as far as 1,000 kilometers over copper or 1,500 miles on optical nets, he added
The algorithm was initially tested on dual quad-core Xeon systems. However, its asymmetric nature means it can be decoded in real time on a single-core client PC.
"This works very happily on PCs using embedded [chip set] graphics and shared memory," he said.
The company has designed its own so-called MicroConsole, a client decoder box about the size of a deck of cards using a single integrated chip. It employs its own networking protocol that Perlman said "uses the characteristics of packet transmission and failures as part of the way it way it achieves its compression."
Delivering a standard definition image requires at least 1.2 Mbits/s in bandwidth. A high def image requires a 4 Mbit/s link.
The company also developed its own wireless controller so as many as four users could play on one system at a time without incurring local latencies from interference. It uses a multi-Kbit/s link over the 900 MHz ISM band.
"We got rid of a whole bunch of layers in the software stack needed for a more generalized wireless architecture, but not for a controller," said Pearlman. "We came up with a structure where by the nature of the transmissions, controllers don't interfere so we get low latency," he added.
However, gamers can use any wireless controller with the system if they choose, he added.
To have meaningful impact on the videogame industry, OnLive will have to attract as many as ten million users, said Pidgeon of IDC. To reach that kind of scale, the 100-person startup will have to vault several tall hurdles.
First, OnLive will need to find distribution partners to get its MicroConsoles into the market. The company hopes to set up partnerships with cable TV and IPTV service providers.
Once it is launched, gamers will quickly determine whether or not the OnLive system delivers the performance its backers claim. That is probably the company's biggest hurdle given the performance-sensitive nature of games and the best-efforts nature of Ethernet networks.
If gamers are satisfied and the service grows, the startup will have to quickly scale its servers. That involves a complex set of calculations based on the dynamics of who uses the system, over what networks and how they use it.
Finally, the maintain and grow its user base, the startup will also have to keep upgrading its networked servers even as it continually reaches out to publishers to bring new games on to its platform.