OnLive Only Had Days to Live in Cash Flow

When news broke on Friday that OnLive was going through some financial trouble, the company's future seemed uncertain. Between rumors of bankruptcy filings, talk that the company had laid off its entire staff, and reports that it would shut down and come back as a brand new company, nobody knew exactly what to think. On Sunday, OnLive confirmed restructuring, and provided some information as to what went down last week.

OnLive said Sunday that the company's assets were acquired by a newly formed company on August 17th. This company will continue to operate under the OnLive name and the OnLive Game and Desktop Services, all OnLive Devices and Apps, as well as all OnLive partnerships, are expected to continue without interruption. While "Assignment for the Benefit of Creditors" meant OnLive couldn't transfer staff to the new company, half of the laid-off OnLive staff were given new employment offers by the new company and the other half offered consulting opportunities.

Beyond that, OnLive didn't go into too much detail regarding what led the company to file for "Assignment for the Benefit of Creditors." However, new details have shed some light on just how bad things had gotten at OnLive. Joel Weinberg, CEO of Insolvency Services Group, the company named as Assignee on OnLive's "Assignment for the Benefit of Creditors," said the company was in millions of dollars of debt and couldn't find a buyer.

"It was a company that was in dire straits," he told San Jose Mercury News. "It only had days to live in terms of cash flow and the like. Something had to be done immediately or there would have been a hard shutdown, which would have been a disaster."

Mercury News reports that OnLive owed $30 million to $40 million to various creditors. Weinberg says that between the assets sold and the deposits and other nonoperating assets retained by ISG, they expect to be able to pay credits 5 or 10 cents on each dollar owed.

Follow @JaneMcEntegart on Twitter.                     

Contact Us for News Tips, Corrections and Feedback

Create a new thread in the US News comments forum about this subject
This thread is closed for comments
31 comments
    Your comment
    Top Comments
  • kawininjazx
    The problem is, people don't want to rely on their internet connection to be able to play games. All this cloud gaming and cloud media makes me nervous because if your internet is down you gotta break out the board games.
    14
  • Other Comments
  • sliem
    I never tried OnLive because it requires very fast internet speed... such as 7Mbps (I only have 3) and some can't afford or don't need that kind of speed.
    7
  • teh_chem
    Not so surprising.

    So let's say a business pulls the "phoenix" maneuver because they're horribly in debt, and it's a legal way of wiping out stocks you granted to creditors so you are no longer indebted to them. What about the other direction--pulling the "phoenix" maneuver when you've just started, just gotten your millions in funding from backers--you walk away with millions of dollars in the bank and zero obligation to your investors.

    I still don't see how this should be legal. I understand why this is accepted (because without a comfort blanket like this, there wouldn't be the few people who try risky business moves because the consequence of failure might be too large).
    5
  • d_kuhn
    Not really a solid business model in my opinion... at least not as marketed (to gamers). I think a cloud gaming service could be viable for casual gamers where titles are not as demanding. Farmville on the cloud... no problem, Skyrim on the cloud... BIG problem. The problem of course is that the online casual gaming market is quickly being tied up in social media tools (Facebook), not leaving much room for an independant.
    2