Infinium Labs Phantom Gaming Service has come to life. The company announced on Monday that the long-promised Phantom Gaming Service will be available from November 18, with the consoles given away free to subscribers happy to sign up for a two-year service.

The company is demonstrating the consoles at the E3 conference in Los Angeles this week, after a planned beta test and original first-quarter 2004 launch were missed. At the Consumer Electronics Show in Las Vegas in January, the company showed a non-working version of the device, frustrating gamers who wanted to see it in action.

The Phantom hardware, a set top box computer with a 40G-byte hard drive that can be attached to a television and a broadband connection, will be given away free to consumers who sign up for two years to the online gaming service. The basic subscription costs $29.95 (around £18) a month and will include an initial batch of free games, with other downloadable games available to buy or rent.

Commitment-shy users can also buy the receiver for $199 (£110) and then have that price credited back to their account over two years if they remain a subscriber.

By comparison, Microsoft's Xbox Live service in the US costs $69.99 (£39) for a start-up kit, including a 12-month subscription that is renewed annually for $49.99 (£28). The Xbox console itself is retailing for $149.99 (£83), having dropped from the November 2001 launch price of $299 (£165).

The Phantom receiver, which is made by Taiwan contract manufacturer Biostar Microtech, has 256MB of main system memory, and is based on AMD’s Athlon XP 2500+ CPU, NVidia's GeForce FX 5700 Ultra GPU and nForce 2 Ultra 400 platform processor. It will come bundled with a game-pad, a mouse and a Phantom Lapboard that Infinium said makes it easy for users to play games designed for use with a keypad and mouse.

Downloaded games will be stored on the hard drive of the device and managed by the service itself. If the hard drive approaches capacity, the least-recently played games will be removed, but will be re-streamed to the hard drive if the user tries to play them.

Jason Armitage, an analyst with research company IDC in Spain, questioned the wisdom of the business model when, he said, very little is known about the service. "It's a bit chicken-and-egg with interactive services and free consoles. You need services, but you need to build a good base of installed consoles to give developers confidence to develop for it," he said.

A 40GB hard drive suggests an expensive product to make, and give away for free, so "We'll have to see how much debt they're willing to take on," he said.

Infinium was not immediately available to comment on the subscriber numbers necessary to make the product break even, or on whether the hardware will be available to users outside the US.

Kevin Bachus, a founding member of Microsoft's Xbox team, joined Infinium in January. At the time, he admitted that the service was still a prototype and that the company had to identify its target customers.