onlive4Ever wanted to play games like Crysis or Gears of War on $300 rig? I’m talking about high definition graphics all turned up to the bleeding edge. If that’s been your long unanswered prayer, then OnLive, a cloud gaming startup may have an answer for you.

What is OnLive? Think of it as the TiVo of gaming. You can stream high end games to your low end computer (PC or Mac) or on your TV via a broadband connection, and brag to your friends about how you can play Crysis, maxed out at 720p 60fps. The trick here is Off-site rendering, powerful servers process the game for you and then render it as a video stream and send them over a broadband connection. And all you need to play them is a simple computer or a TV.

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The service was unveiled at GDC 09, as a technology preview currently under internal beta testing with plans for a full scale launch later this year. Being developed by Rearden Studios, the service relies on powerful servers that do the processing for you and stream the content over a broadband connection. For high definition gaming, you need to have at least a 5 Mbps connection, while standard definition is available on as low as 1.5Mbps. Rearden developed their own proprietary compression technology that claims to have a compression time of only one millisecond, striking out the possibilities of any major lag.

On top of that, they have specialized algorithms on the client side that are dedicated to keep the ping under one millisecond. The video stream is delivered to your PC or a set-top box in case you want to play it on a TV. The later is as big as a human hand and would cost “less than a Wii”. Multiplayer and social capabilities are said to be modeled after the insanely popular Xbox Live.

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The service has already gained attention of the industry and big name publishers like EA, THQ, Ubisoft, Take-Two, Epic and more are already on board. The revenue and subscription model for the service is currently under works as the service gets ready for public beta due in the summers. Overall, if the service gains popularity, it would be beneficial for both the players and the publishers as the former wouldn’t have to spend thousands of dollars just to get the latest rig, and the later would be a little less concerned about piracy.

OnLive would have five data centers spread across the US to minimize the lag, if at all. As for our international users (including me), there is no word on availability, and I don’t see Rearden doing that anytime soon. But hey if it works there, someone might step up and try to pull it off somewhere else.

Thanks to Kotaku for the images.