The videogames business has a problem. While much of the rest of the world had its back turned, games have become a gigantic, profitable, wide-reaching entertainment industry, capable of launching products that dwarf Hollywood's most ambitious blockbusters and even starting to show signs of a burgeoning arthouse-style movement. Tens of billions of pounds pour through the tills of game retailers around the world each year.

However, unlike their counterparts in movies, TV and music, game publishers have found it incredibly difficult to diversify away from one, basic business model. They launch a game which costs £30 or £40. The vast majority of its sales come in the first few weeks; after that, it is heavily discounted until it eventually fades from retail shelves. With a few notable exceptions, such as Nintendo's Wii Fit and Brain Training games, there's no "long tail", and little room for slow-burning games which rack up steady sales from week to week.

This creates many problems for game publishers. It means that unless they can drive massive sales in the first week, usually thanks to an expensive marketing campaign, their game is considered to be a commercial failure - which, of course, discourages creative risk-taking. In addition, publishers are painfully aware that consumers' perception of the value of media has been in free-fall in recent years, and they fear eroding their audience if they can't find lower-cost ways to deliver game experiences.

This is why companies like Playcast - and rivals such as OnLive and Gaikai, both of which are competing to be the first to launch a commercial on-demand games service - are so attractive to the games business. Their technology is unproven and their business models are untested, but if all the hurdles can be cleared, the future they promise could be glorious - for the publishers, at least.

Playcast talks about a Sky Movies Premiere style service, where games appear a few months after they have launched at full price in stores - generating a second wave of excitement and a new stream of revenue. OnLive waxes lyrical about the potential for a complete library of games to be at every subscribers' fingertips, giving publishers a flow of revenue that could last for many years after launch. After decades of looking jealously at movies - which enjoy cinema revenue first, followed by DVD revenue, Pay-Per-View TV and finally terrestrial TV licensing - games publishers think they may finally have found a goose that's willing to lay some golden eggs for them.

Consumer reaction to the idea, meanwhile, has been cautiously welcoming - if slightly sceptical. The idea of being able to play the latest games without paying hundreds of pounds for a new console is attractive - but many consumers prefer to collect games, rather than paying a monthly subscription fee and owning nothing at the end of it. Their fear is that services like Playcast will eventually replace the ability to buy and own media.

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