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OnLive Only Had Days to Live in Cash Flow

By - Source: San Jose Mercury News | B 31 comments

Insolvency group says OnLive was in 'dire straits.'

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.

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  • 14 Hide
    kawininjazx , August 23, 2012 7:10 PM
    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.
Other Comments
  • 7 Hide
    sliem , August 23, 2012 6:46 PM
    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.
  • 5 Hide
    teh_chem , August 23, 2012 6:52 PM
    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).
  • 2 Hide
    d_kuhn , August 23, 2012 6:56 PM
    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 Hide
    gamerk316 , August 23, 2012 6:59 PM
    sliemI 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.


    3Mbps is slow by todays standards. Can't believe parts of the country don't have 10-15 Mbit standardized yet...
  • 6 Hide
    brickman , August 23, 2012 7:09 PM
    gamerk3163Mbps is slow by todays standards. Can't believe parts of the country don't have 10-15 Mbit standardized yet...


    Try 150Kbps and downloading a game off of steam. Terrible, but it's the fastest I can get :|
  • 14 Hide
    kawininjazx , August 23, 2012 7:10 PM
    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.
  • 5 Hide
    beardguy , August 23, 2012 7:12 PM
    gamerk3163Mbps is slow by todays standards. Can't believe parts of the country don't have 10-15 Mbit standardized yet...


    Lots of people don't even have 3Mbps. My last house I only had 1.5Mbps because that was all I could get.
    This is the reason why OnLive and other cloud-based services are just not a viable solution for most people yet.
  • 1 Hide
    ddpruitt , August 23, 2012 7:14 PM
    Quote:
    Can't believe parts of the country don't have 10-15 bit standardized yet...


    Unfortunately in the Southwest where I leave 10 mbit is a pipe dream right now. With the distances involved and the population density in the area the best anywhere near me is 7 mbit, and that's on a good day. OnLive's service requires speeds that just aren't readily available for the vast majority of the country right now. I figure that the new company will fail just like the first.
  • 0 Hide
    beardguy , August 23, 2012 7:15 PM
    ^Oops that was supposed to be @KawiNinjaZX
  • 0 Hide
    chomlee , August 23, 2012 7:16 PM
    sliemI 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.


    Not to make you feel bad but I just did a speed test on someones 4G phone at my work and he was getting 12 Mb/s download speed.
  • 6 Hide
    beardguy , August 23, 2012 7:16 PM
    ^ Exactly right. A few weeks ago I lost internet for 2 days, it sucked for sure, but could you imagine how shitty it would have been if I was running everything off the cloud?

    The speed and reliability of the internet in America is just not there yet. And even if it does get to that point, I still don't see the cloud being the best solution.
  • 4 Hide
    Owenator , August 23, 2012 7:18 PM
    I tried it out as a beta tester. Played Crysis Warhead Onlive and compared to PC the game play was sluggish and the graphics were 720p at best. So I never bought in - lucky me.
  • 6 Hide
    beardguy , August 23, 2012 7:19 PM
    chomleeNot to make you feel bad but I just did a speed test on someones 4G phone at my work and he was getting 12 Mb/s download speed.


    My phone will report speeds like that as well. Yet it's still slow as shit sometimes. Moral of the story, speed tests don't always translate to real-world results.
  • 0 Hide
    ubercake , August 23, 2012 8:00 PM
    It's a great concept. Who wants to upgrade hardware if you don't have to to play your favorite games?

    I have 15Mbps and there was still often delay in the gameplay.

    I tried it. I played NBA 2K12 on my laptop. It especially stinks for multiplayer gaming because of the delay/lag. It's neat that we're getting close to being able to run near-dumb terminals for gaming, but we're not quite there yet.

    Hardware companies probably do not like the prospect of this becoming a way to game or compute in general. If I didn't have to, I wouldn't keep upgrading my PC every year to get the best performance.

    I wish OnLive good luck for the sake of my pocketbook, but I can't support the idea right now. It's not there.
  • 0 Hide
    RADIO_ACTIVE , August 23, 2012 8:17 PM
    I wonder how many actual paying subscribers they have. Can't be that many... Great idea, just to soon, the world is just not ready yet, but its coming.
  • 4 Hide
    godfather666 , August 23, 2012 8:19 PM
    I'm glad they're not doing so well. I enjoy buying expensive hardware and upgrading my PC.

    If there was no point in doing so, I'd have to look for another hobby.

    Anyway, it's a bandwidth hog.
  • 1 Hide
    SGTgimpy , August 23, 2012 8:22 PM
    The problem with the infrastructure now days in the US is it is built, owned and controlled by the greedy services Providers. This means they can determine when and how they upgrade an area and mostly it is determined by profit not by need. This is very bad for the consumer and the growth of the internet.

    I remember a Google Engineer once gave an example of how to remedy this problem by having third party own the infrastructure and be responsible to maintain and upgrade not based on profit but need. Then all providers are able to come in and provide their services on this network. This would not only increase roll time to new areas but it would also increase competition between providers. Right now, providers can hide behind the crap of “It cost so much to build out infrastructure” and also with them owning the network cause a lot of lock and key scenarios that end up being very bad for competition and the customer.

    I believe this is what Google’s end game maybe in the testing out in Kansas City with them building their own Fiber network.
  • 0 Hide
    crysex , August 23, 2012 8:33 PM
    RADIO_ACTIVEI wonder how many actual paying subscribers they have. Can't be that many... Great idea, just to soon, the world is just not ready yet, but its coming.


    That's what I'm thinking. Consoles should go to hell as well! PC FTW!
  • 0 Hide
    SGTgimpy , August 23, 2012 8:49 PM
    I honestly believe that OnLive is a good product and good idea, but again it is ahead of it's time. If it can hang on till hardware, software, and infrastructure evolve to the level that is need for this platform to truly shine. Then it will be great, but until then it will not be able to be considered a viable solution for any gamer.
    I mean if you wanted sub-par graphics and crappy controls today you could just play on console. :) 
  • 0 Hide
    giovanni86 , August 23, 2012 8:51 PM
    I got the speed for onlive (30Mbps) but i too do not like the idea of having to be connected and my internet goes out which happens (Charter 0_0) But theres always a way as someone mentioned with a phone speed of 12+Mbps just tether your phone as a hotspot, connect to it wireless with your PC and bam you got internet all over again, although the single you get varies at my own house i can achieve 17Mbps off my GS2 which is really amazing.
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