If OnLive becomes successful, Microsoft and Xbox will be hit harder than Sony or Nintendo -- because Microsoft does not have many first-party studios and exclusive franchises.
All the third-party studios would love to away from Xbox, PlayStation and Nintendo consoles. Microsoft, Sony and Nintendo will have to rely on their own internal studios and exclusive titles to attract consumers to their own consoles. Sony and Nintendo will do fine as they have very strong internal studios and lots of franchises, but I don't know if Halo and Gears of War will be enough to keep Xbox afloat.
Microsoft has been "outsourcing" game development and shutting down their own studios, because they think that business model will work and save cost. Now OnLive has really thrown a wrench into Microsoft's plan for the console market.
Sony will take a big hit as well, but Nintendo will be the least affected as long as Nintendo thinks "out of the box", makes innovative products that no one else has and everyone wants.
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