Massive layoffs at OnLive, company sold [UPDATE]
Update: OnLive has issued an official statement, saying that the company’s assets have been sold to an unnamed buyer and that the cloud gaming service will remain available under the wings of a newly formed company. The statement was sent by email which reads as follows:
We can now confirm that the assets of OnLive, Inc. have been acquired into a newly-formed company and is backed by substantial funding, and which will continue to operate the OnLive Game and Desktop services, as well as support all of OnLive’s apps and devices, as well as game, productivity and enterprise partnerships. The new company is hiring a large percentage of OnLive, Inc.’s staff across all departments and plans to continue to hire substantially more people, including additional OnLive employees. All previously announced products and services, including those in the works, will continue and there is no expected interruption of any OnLive services.
We apologize that we were unable to comment on this transaction until it completed, and were limited to reporting on news related to OnLive’s businesses. Now that the transaction is complete, we are able to make this statement.
There’s no mentioning on who actually bought the company, but according to a Joystiq source it’s an individual who’s “impressed” with what OnLive has been doing. So unlike Gaikai which was bought by Sony, OnLive still doesn’t have a major company backing it.
Yesterday, Brian Fargo, game developer and CEO of InXile Entertainment, received an email from a former employee of OnLive that just about everyone except for some key upper management had been sacked.
The email which was sent to Kotaku reads as follows:
I wanted to send a note that by the end of the day today, OnLive as an entity will no longer exist. Unfortunately, my job and everyone else’s was included. A new company will be formed and the management of the company will be in contact with you about the current initiatives in place, including the titles that will remain on the service.
It has been an absolute pleasure working with you and I’m sure our path with cross again.
Since that broke, all kinds of rumours started to spill, but the most reliable seems to be that OnLive will cease to exist in its current form, has filed for some sort of bankruptcy and will be taken over by a yet unknown third party.
OnLive’s director of corporate communications, Brian Jaquet, didn’t want to “comment on rumour and speculation”, but did state the following to Forbes:
“We don’t respond to rumors, but of course not. I have no comment on the news other than to say the OnLive service is not shutting down.”
“No, let me be clear. We are not going out of business.”
Kotaku is reporting that although Jaquet states OnLive isn’t going out of business, an all-staff meeting was held where CEO Steve Perlman said that OnLive would be filing Assignment for the Benefit of Creditors, or ABC, in the state of California. This status affords financially troubled companies a level of protection from creditors. Perlman also said that the company in its current form would cease to exist and that no one would be employed by OnLive.
A source close to OnLive told Engadget that OnLive had apparently been entertaining acquisition offers from different companies including HP. Once the proceedings regarding OnLive would be finished, the remainders would emerge under a new name and a small number of people would be hired again.
Engadget’s source also offered up some numbers that clarify why things are going so wrong with OnLive: apparently the company had an average amount of users of 1.100 to 1.500, with peaks up to 1.800, while its reported operating costs a month are around $5 million. With such numbers, it’s not much of a surprise a company can’t keep in business in its original form.
As we hear more, we’ll be sure to let you know.