OnLive, in a nutshell, is a “cloud” video game service. In other words, all video games live on their servers and you subscribe to the ones that you want to play. But you don’t download the games to your machine and play them locally. You play them on *their* servers, and they push content back and forth to you through your web browser via your broadband connection. In other words, your computer now becomes a glorified dumb internet terminal that receives the images of the actions you perform in the video game; the OnLive servers do all of the heavy lifting of graphics processing.

So, the theory is that you can have a NetBook or an old Centrino laptop and you can play Crysis!! Crysis on a NetBook?!? I don’t effing believe it. But that is their vision, and with the way the video game companies are signing up in droves to be a part of this service (can you say EA?), this vision may actually have legs.

And if it has legs, oh my, how that changes things for companies like:

Intel, AMD: Video games are the most processor intensive applications in the world. If OnLive is successful, that opens the flood gates for more processor-intensive subscription-type markets. People can buy less powerful machines, but still get top quality functionality. That could eat heavily into the Intel and AMD profit margins — although, Intel and AMD should hope that OnLive buys their processors for the OnLive servers.

Sony, Microsoft, Nintendo: Well, this is simple. The video game console becomes obsolete. As Paul Thurrott alluded to in Windows Weekly – ‘Microsoft just wasted $5 billion in their XBox investment’

Now, of course, broadband would need to be plentiful. Quality of Service would need to be guaranteed. As they alluded in the Windows Weekly show – hey, Comcast, are you listening? And, there are other hurdles to overcome. They were talking about Amazon buying this service being a good play. I am not 100% convinced right now of that being a smart move; but if this does what I think it might do, then yes, any company should buy OnLive if they had the resources.

This is definitely something I will be keeping tabs on because this could be a “game changer” (pun absolutely intended). And I don’t say that often.