OnLive’s cloud gaming service will be built into Vizio flat-panel TVs

Cloud-gaming service OnLive is announcing today that its top-tier online games will be available on new models of Vizio flat-screen televisions, allowing consumers to play high-end PC games on a TV with no additional hardware purchase. Vizio will also make the service available on other gadgets, including tablet computers, Blu-ray players and smartphones.

If this kind of on-demand service takes off on the computer, OnLive could make a lot of headway in its plans to disrupt the console video game business, as it will eliminate the need to buy a console. OnLive and Vizio, the nation’s largest liquid-crystal display TV vendor, are making the announcement today at the Consumer Electronics Show, the big tech show in Las Vegas this week.

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Steve Perlman, chief executive of Palo Alto, Calif.-based OnLive, said in an interview that the OnLive service — which streams games from web-connected data centers directly to a variety of devices — can run on the same hardware that is ordinarily included in the web-connected Vizio TV models. (It’s a chip made by Marvell).

“For the first time in the history of video games, consumers will be able to enjoy premium video games directly on a TV, no console or computer needed,” said Perlman.

OnLive’s cloud technology runs a game on a beefy server in a data center. It compresses the data and sends it over broadband connections to the user’s computer. The benefit is that the user can play the newest high-end 3D games on ordinary hardware, or log in to play those games while on the run. OnLive can thus disrupt not only game retailers, but game hardware makers as well.

With the new distribution channel on the TV itself, OnLive can reach its audience of gamers more readily. Besides Vizio, OnLive is in talks with other TV makers as well, Perlman said. He also said that OnLive plans to offer movie services in addition to games sometime this year, giving TV makers an additional reason to include the service as a built-in feature on a TV.

The TV makers are already including web-based services such as Netflix, Pandora music streaming, and RoxioNow (previously CinemaNow). But the inclusion of OnLive could also disrupt another emerging trend: putting apps on a TV set. That’s because with OnLive, the games can be streamed to a TV set. Users don’t have to download an app at all. They just play instantly over a broadband connection.

The Vizio models run the software routines that are ordinarily included in OnLive’s MicroConsole, which adapts images so they can be decompressed and displayed on a TV. But since Vizio already has the same chip in its TVs that is in OnLive’s MicroConsole, the adapter is no longer necessary on a new Vizio TV.

OnLive launched its service on the PC last June and in November it shipped its first MicroConsoles. OnLive works on PCs, Macs and iPads. Perlman said the acceptance has been great and users have already played millions of game sessions. Vizio will include the OnLive service on its high-definition TVs, Via tablets, Via Phones, and Blu-ray players that use the Via Plus ecosystem.

OnLive has dozens of hardcore and casual games on its system and it plans to add more, including some of the newest blockbuster games hitting the market. The games will be available in full 1080p HD resolutions with 5.1 surround sound. In fact, OnLive is announcing today it has created a partnership with surround-sound technology company SRS Labs. Under the partnership, OnLive subscribers will be able to hear game sounds in SRS’s 5.1 surround-sound technology via an automatic update. The update will happen early this year.

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OnLive and Vizio are demonstrating working versions of the service on Vizio products in hotel suites at CES. The Vizio TVs and other devices will be available later this year. OnLive’s games range in price from $2.99 for a rental to $49.99 for full purchases. It also offers an all-you-can-eat $9.99 a month subscription for a collection of games.