GDC: OnLive cloud gaming service could change everything [Update]

Update: A string of top-end publishers are now confirmed as on board with the service.

OnLive, a service that theoretically allows users to play high-end games on their TVs and PCs without the need for any involvement in the hardware "arms race" at all, has been announced at GDC.

OnLive is a cloud computing service. Your controller inputs are uploaded to a remote server, on which your game is being played. What's relayed on your TV screen is a video of play.

Lag has been reduced to one milisecond in terms of video encoding, apparently. You'll need a 1.5mbps connection for SD play, and a 5.0mbps connection is required for 720p.

You can either use virtually any Windows PC or Mac for play, or buy a small dedicated box for your ethernet and controller cables.

Think about it. In theory, OnLive would allow you to play Crysis on a netbook. PS3 and 360? Why?

Think about it some more. Now read this IGN article. There's a video of OnLive working here.

OnLive will get a closed beta this summer and a launch later this year.