Steve Perlman, CEO of a company called OnLive that's readying an on-demand video game service, cringes whenever Google's gmail or other high profile Web services conk out. After all, his company's bold plan is to offer streamed access to a slew of brand name video games via the cloud in such a way that users at their PCs and TVs get performance they're used to experiencing on consoles.

"It's not just cloud outages, I also cringe when I see a Windows virus lock up a PC. I have issues with both ways of computing," Perlman says. "But we're looking at where things are going. It's absolutely obvious to me that we're moving away from thick local clients and into the cloud."

Perlman, whose rich tech industry background includes leading roles in creating Apple's QuickTIme and eventual Microsoft acquisition WebTV, isn't taking cloud reliability and performance for granted. His company spent seven years in stealth mode working on its technology. OnLive finally making its debut at the Game Developers Conference in March and opened a public beta earlier this month in advance of a planned winter service rollout.

"In a lot of ways we've solved cloud computing," Perlman said during an interview at the [email protected] conference where he wowed attendees with a demo of OnLive streaming the Electronic Arts game Crysis from servers in a data center in Washington. "Looking at other types of cloud computing systems there always is a need for a significant amount of computing capability on the local system and there's usually some delay in waiting for a file to come in or upload."

Behind the scenes during the beta period, that is, behind the games from Electronic Arts, Ubisoft and others that OnLive will enable customers to play over their broadband Internet connections for a subscription fee to be determined, are three rented data centers in the Washington, Texas and Silicon Valley (users need to be within about 1,000 miles of a data center to experience no lag if playing a game). The co-location facilities are stuffed with servers, which each feature two video compressors, one delivering a live stream adaptive to the highly variable DSL, cable modem or other link to a customer's home and another compressing a one-way high quality video stream that is IP multicasted. Multicasting can be used to distribute "brag clips" that gamers record of their highlights as well as to enable customers to watch, say, a game tournament.

"If we were to unicast to hundreds of thousands of users it would just swamp the network systems," says Perlman, whose management team includes veterans of companies such as Eidos and Netscape. "Compressed video might be a 5Mbps stream. If you have a 100,000 simultaneous 5Mbps streams, even Gigabit Ethernet gets overwhelmed very quickly. There are so few people doing things like IP multicast within the data center, and we're doing very high speed multicast."