It has been a busy few days for OnLive, the cloud gaming service. On Friday rumors started circulating that the company was about to file for bankruptcy and lay off all employees. An anonymous staff member spoke to GamePolitics and described an all-hands meeting during which CEO Steve Perlman told everyone that their jobs were gone. He reportedly said “under this variation of bankruptcy which is valid in California the company as of this moment does not exist and portions of it are being acquired by a brand new entity but what that means is all of your options are gone.”
Clearing out the existing staff and their stock options, opened the way for an investment from a group led by Lauder Partners who will form a new company but retain the OnLive brand and assets. Apparently a small number of employees have been offered short term contracts with the new company.
The company initially denied the rumors and then eventually released this statement.
“The OnLive Game and Desktop Services, all OnLive Devices and Apps, as well as all OnLive partnerships, are expected to continue without interruption and all customer purchases will remain intact; users are not expected to notice any change whatsoever.
OnLive's current initiatives will continue as well, with major announcements of new products and services planned in the coming weeks and months.
The asset acquisition, although a heart-breaking transition for everyone involved with OnLive, allows the company's core innovation and on-going offerings – the product of over a decade of hard work transforming the OnLive vision into reality – to survive – and continue to evolve.”
OnLive has stated it has over 2.5 million subscribers and an active user base of over 1.5 million but there have been claims, reported at Joystiq, that the average number of concurrent users was around 1,800.
The company’s main competitor, Gaikai, was recently acquired by Sony so it remains to be seen whether OnLive will be able to compete in the coming months.