OnLive does feel something like the future of digital distribution.
Loading up OnLive on a PC is vaguely like loading up Steam for the first time. There's all these games available to you right now. While lacking the immense catalog of Steam, OnLive as a cloud gaming system, of course, offers an even greater sense of what “now” can mean to the gamer, though.
With no downloading, one can just access a game stored on a remote server and start playing. The first game that I loaded up was Borderlands and following a few seconds of loading time, there was the familiar intro movie running on my PC looking much as I remembered it on console. Having now played with the system on PC with a very good internet connection for over a month now, I can report very few latency issues. I have occasionally received a brief “Network Problem” warning while playing (which prompted me to save just in case), nevertheless, my games suffered no ill effects as a result, and I continued playing at the same speeds. The only problem moment that I can report was over the Thanksgiving holiday when the picture broke up a little while I was playing Saints Row: The Third, though it wasn't anything very long lived or especially alarming.
Unfortunately, I can't speak to the experience of OnLive on its microconsole, which allows this same cloud gaming experience, but direct to your television. In the weeks that I had the system, I was only able to connect to the service three times via the microconsole (once allowing me to download an update and the other two times in which I actually played for a little while). When I could connect, it ran well. Otherwise, I have received regular connection errors, which technical support reported was a problem encountered by some users that their engineers are currently working on. Browsing the OnLive tech support forums, I read a number of threads that suggested that this problem has emerged for some owners around the time of the UK launch of OnLive, however, OnLive did not verify this one way or the other.
That being said, the service on PC was extremely approachable, with a simple intuitive menu system that can be navigated quickly and efficiently. Like Steam, OnLive offers games for purchase with most of these purchase items being newer releases, like the aforementioned Saints Row: The Third or Batman: Arkham City (the former of which was available on OnLive at launch, the latter of which became available on the system a few weeks after its physical release). Some of the games are in the “newish” category, like Bastion or L.A. Noire (though it is The Complete Edition, featuring all of the recent DLC that didn't ship with the game). Additionally, for a $9.95/month subscription fee, OnLive offers a library of over 100 games that you can access at any time.
While some of these games are what I would consider shovelware, I was delighted to find that quite a number are actually very good games. I was especially pleased that some classics, like the original Deus Ex, were there for immediate play. Titles in the PlayPack bundle include, for instance: Batman: Arkham Asylum, Bioshock, the original Fallout, Hitman and Hitman 2, Just Cause, the 2008 Prince of Persia, S.T.A.L.K.E.R., Tomb Raider: Anniversary, Tropico 3, The Witcher, etc.
Assuming that OnLive continues to build this library of games, I find the idea of having immediate access to even more classics available for a reasonable monthly fee fairly attractive. It is something that I would be willing to subscribe to, as a gamer that likes to revisit games that I no longer have the discs for or that are on previous generation consoles (or have the opportunity to play for the first time, if I missed them in the last few years or maybe years and years ago). Much as I love Steam, I know any number of gamers that pick up an old game here or there for a few bucks during a Steam sale that they then never get around to playing. The monthly fee would relieve a bit of “Steam sale guilt” as you can dabble with something and move on if it isn't quite what you remembered or wasn't something you actually were in the mood for yet if it is available as part of this bundled group of freely available games.
The other feature that is interesting is the ability to watch other players in the OnLive “Arena” who are currently playing games on the service. I'm not one who finds watching others play games especially engaging, but the ability to hop quickly to peep over the shoulder of another player before you buy a game clearly has its advantages. I suppose that someone looking for some help with strategy in a Tropico game or something like that might also find being able to watch someone else build a city in that game somewhat interesting, too. It does recall the arcade era, when looking over shoulders before you get the chance to play, was a fairly normative social activity. You do have the opportunity to cheer or jeer a player that you are watching as well, which adds an odd and sometimes off putting (when you get jeered while playing) experience.
OnLive does feel something like the future of digital distribution. What it amounts to is something like the gaming equivalent of on demand television services that offer immediate access to television shows and movies, some of which might be offered “for free” as part of a monthly charge, while newer media costs a bit more. As long as the library of games (both PlayPack “freebies” as well as the addition of fresh titles for purchase) continues to grow, I'm pretty sold on the PC version of OnLive, something that can be accessed with just a free download and purchase of a subscription. As I said, I can't say how good the microconsole experience might be. If connections stabilize, I could see dropping the $100.00 or so (microconsole systems range from $119.00 to $159.00, depending on the contents of the bundle) to play on my own HD television, so I hope that the service can get things fixed for users like myself.