First, campus IT officials have to contend with the strain on their networks' bandwidth caused by students' streaming or downloading of music and movies online. Now, a new challenge is about to emerge: A startup founded by technology entrepreneur Steve Perlman says it has developed a technology to deliver video games on demand, an idea that threatens eventually to take consoles out of the equation.

OnLive Inc., Perlman's Palo Alto, Calif.-based company, unveiled its new technology March 24 at the Game Developers Conference in San Francisco.

Seven years in the works, OnLive says it has developed a way to stream video games...

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