I can't see OnLive being a competitor in this market for one simple reason: It's entering the game late. There are already half a dozen established storefronts, a few of them massively popular in certain circles (Steam is generally great, Gamer's Gate has euro/niche titles, Good Old Games has older titles). A service like this can't just come in and claim a small marketshare and be happy with that; at the very least investors will clamor for it to try to take over the market. In much the same manner as every MMORPG since WoW, each new storefront is positioned as The One, the Steamkiller - and then fails to be better than Steam. In Origin's case, it's the one-company-centric nature of the beast - the fragment of the market that it represents (not to mention EA being large and self-important); in OnLive's case, it's a whole raft of issues that fail to make it competitive. It might hang on, barely, with however many people join its service... or it might die completely - an eventuality that will change a great deal about gaming as it now stands. For, if OnLive dies, people will lose access to the games they purchased, perhaps even as soon as a few days prior. They will not be happy about that, and it could bring to the forefront the prime issue with digital distribution, esp. server-centric digital distribution - how do you play if the provider goes belly-up?
Interesting, if it turns out that way. I will be waiting and watching avidly to see if it does so.