Cloud gaming means the games are run on remote servers, and its graphics and audio is streamed to your computer, tablet etc, so you don't have to install the games, and more importantly they can run all games at the highest graphical quality, regardless of the hardware performance of your computer.
In terms of payment, they are now using a subscription model.
But then, if you went to OnLive, you wouldn't buy Civ 5 for PC/Mac first anyways. Of course that likely means that OnLive wouldn't host mods either.
Checking out Onlive costs a bit more:
You can 'rent' games for a few days or 'buy' access to it for the game price.
OR -
you can pay 9.99/month and get access to a rotating pack of games. So if you buy more than 2 games a year, this is the one to go for.
Ofc, their hardware costs another $100 if you want to skip the PC/Mac and just use the TV.
edit:
basically, if you've got a great internet connection, but crappy laptop/PC, then OnLive would be cheaper than upgrading if you don't have the money to upgrade.
Only question would be 'how many people are using OnLive'? MP games might be supported, but if there's only 5 of you trying to play at the same time, it's not that interesting.
Meanwhile, a version of G&K is playable at the OnLive place, as reported by @TroyGoodfellow (Flash of Steel.com).
Twitter said:
TroyGoodfellow: Bit of hands on time with Civ 5: Gods and Kings at the OnLive booth. Really neat to see how Faith is worked in. Also Maria Theresa - swoon.
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