The particular setup process of OnLive depends on what hardware you're using - Microconsole, PC or tablet/smartphone - but all are quite simple. We'll get onto the quirks of each later.
When using OnLive, the vast majority of the processing legwork is performed by OnLive's servers rather than your hardware. Your controller movements are registered at your end, but what is piped back to you is an up-to-720p video signal - hence why almost any hardware can handle it.
The OnLive frontend is quite showy, full of 3D visuals and swish animated transitions, but crucially it doesn't slow your passage from start screen to game very much. As far-away servers are doing all the work, it's smooth and quick-to-navigate the whole time. We'd like to see a non-fancy 2D version of the menu system added as an option too, as people often tire of needless gloss, but - as is - it's highly intuitive and clear.
OnLive recommends a 2Mb connection to get a good streaming experience - around 256kb/sec theoretical download speed. We tested the service using a 20MB home broadband connection that maxes-out around 1.1MB/sec download. In theory, we should have seen the best the service has to offer.
At its best, OnLive outputs 720p video, carefully encoded using proprietary techniques that make this ambitious remote gaming possible. The video quality is not perfect. Image quality is a little softer than what you'd see from a games console outputting 720p video quality, and there's quite a bit of mosquito noise in some situations. This digital artefacting crops-up mostly around areas of precise detail - such as text.
Onlive is also very aggressive about how it tailors the video signal to your connection speed. The priority is, quite rightly, keeping the feed going, and there appears to be some pre-emptive downgrading of signal quality when signs of connectivity strife arise. We noticed occasional moments where the video bitrate would dip drastically, causing the image to become much softer and introducing many more signs of digital decay. For the most part, we played over Wi-Fi, which may have had a hand in exacerbating these problems. If you have a remotely unreliable internet connection, these problems will blow up in Onlive's face.
However, with a rock-solid, high-speed connection, we found image quality more-than-acceptable as a gaming platform to use alongside a console. Some games fare better with the video encoding process better than others, too. Bastion and Puzzle Quest looked pretty fab, for example, while we found it harder to get used to the soft look of Dirt 3 - which looks fantastic on a console or high-spec PC.
There are other graphics issues you have to live with too. Not every game appears to be transmitted with all graphical bells and whistles turned on. Presumably, this is a strategy to take some control over server load, but is another factor that will irk the hardcore. The most common nagging things we spotted were missing lighting effects, cut-down view distance and texture limitations. Hand-in-hand with the video encoding quibbles, it's clear that this is an area OnLive needs to work on in the future.
Another area where you might imagine performance would suffer is in lag, due to the amount of to-ing and fro-ing of data that goes on from translating your controller movements into video. However, we found only the tiniest discernible delay apart from when the connection started playing up - causing some very odd mouse movements. Hardcore FPS gamers won't be happy, but for adventure games and less hair-trigger shooters, the response rate is fine. OnLive is far from perfect, but given how widely available the service is already, offering this level of performance is hugely impressive.