Online streaming gaming service OnLive has scrapped its monthly fee after realizing it could sustain itself on a free-to-play ad-based model. OnLive launched a couple months ago, bringing the ability for users to play online games for a flat monthly fee of $4.95.
It tried a two-tiered system that allowed for some users to play for free while some paid a monthly fee. However, after running the test for a while, the company realized it could run without charging any individual uer any money.
In addition to earning revenue through advertisers, it also gets money from customers who purchase specific game titles.
"We actually got the first indication that the business could be supported without a monthly fee when we let beta testers start purchasing games before we launched the service," said CEO Steve Perlman in a Computerandvideogames.com story.
"So, to hedge our bet, we established our Founding Member promotion to defer the monthly fee for a year for everyone. Well, after getting to scale, we found that what we had suspected was true: that the business model works without a monthly fee. This allows us to continue without a monthly fee on an ongoing basis," he added.