OnLive might be able to convince console players to put up with these blurry, washed-out graphics (if they are really lucky), but it's totally unacceptable on the PC. I didn't expect footage as crisp as YouTube or the like, but it is still a shock to see just how bad this actually is. What's more, OnLive's brightness makes everything look like it has too much bloom applied. If they did this to disguise just how heavily compressed the footage is then they have certainly failed.

Wow, comparing it to a local PC running it (maxed out, I assume), it's like the Fisher Price version of the game.

Here are some Batman: Arkham Asylum shots. Like before I don't know how the connection affects the video quality so it's possible it could look better. If, as cogadh said, their servers are only in the locations they originally mentioned then Dallas would be the closest, but still at least over 900 miles away (so obviously not ideal).
OnLive 1. PC 1.
OnLive 2. PC 2.
OnLive 3. PC 3.
OnLive 4. PC 4.
OnLive 5. PC 5.
The PC shots are maxed out, but at the same resolution (720p).

How much compression were you using in those JPGs? If you weren't using any then those shots are very blurry. Also the Batman AA shots clearly show it's not running on very high settings.

The 30 minutes demo for everything certainly is interesting, especially as there isn't any limit to the number of times you can take said demo. That said, I really only see it succeeding as a PC game rental service.

I'm more curious as to how detailed it will be during heavy action when the screen changes the most.

Delicious compression.

Works on a netbook. [url=http://www.greythird.com/netbook2.jpg]2 3
The blurry graphics aren't nearly as noticeable on a 9" screen.
Of course since wireless isn't supported and you need at least a 5mbps connection it kind of defeats the purpose of playing it on an ultraportable computer.

heh. ok, as much as i think onlive is going to crash and burn because of its pricing model, it's pretty cool to see borderlands and ut3 running on an eeepc.

I still think it's silly. You've already mentioned how a wired connection is more or less required, so using it with netbooks (when the main purpose it to take it around and using the wifi or even 3G functionality) would not be ideal. I still don't get who they're trying to target this at.

I'm going to feel real schadenfreude when this service crashes and burns. And real confusion if it doesn't.
Those comparison shots ceemdee posted tells it all. That's not gamma settings, or resolution, or the connection. That's blurry details due to the particular image compression technology they're using, which by the way isn't looking very impressive.

Not to mention the tiny ass screen.

This seems like an excellent service for trying out demos this year. Anything you haven't played before, play it's demo instantly to see if you like it and if you do... buy it somewhere else.
Really, if the pricing scheme is that bad and there is a big chance this may crash and burn I wouldn't spend any money on it, unless there's a change in the way of their pricing model. I can't use it anyway since I'm not in the States and I only buy my games on sales.
Still, this kind of technology can only improve. Greater broadband and better video quality is not so far fetched. Plus, you don't really get to install any byte from the game on your computer. Anti-piracy at it's greatest.
I wonder how well this would work if they simply charged more as a subscriber service (say, $20.00 a month) and you DON't get to buy the games, they're just there, included with the service. Play anything you want for a monthly fee. Stop paying, stop playing, return anytime.

The technology will improve but it's the Onlive pricing AND the ISP pricing that matter the most. Bandwith requirements only increase they don't decrease and with ISP's being ever more stingy doesn't help.
As for "piracy"....
Whenever you shift the "piracy" away from physical\digital media to a server-only model then the "piracy" then moves to hacked accounts\stolen credit cards and such. You can never get away from "piracy". You'll just move it to a different method and/or lose your potential customers.