OnLive is going to announce a new system for game distribution and if it works according to plans, it may become a serious threat for the current game console business model of many big players like Nintendo, Sony and Microsoft.

Though this new game distribution system is being hyped to utterly change games game (if it works), it’s not right to say how much danger it really has for the traditional games.

Steve Perlman, who is quite well-known as WebTV founder and Eidos former CEO Mike McGarvey are working behind the creation of the new system. They are expecting to digitally distribute its first run quite soon for publishers like Ubisoft, Electronic Arts, Atari and Take-Two.

This new system has been designed to let users stream down on-demand games at their best quality on some Intel-based PC or Mac that has Vista or XP no matter how powerful their system is.

Similarly, with a tiny plug-in device, the system will also be able to directly stream the games in some TV and users will also be able to use VoIP headsets and a custom wireless controller with it.

The OnLive system will use the same wireless controllers that are available in traditional console systems like PS3 and the Xbox.  But there is a micro-console to directly stream the games from a TV. According to OnLive, it’s going to unveil the new development at Game Developers Conference.

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