OnLive has laid off most of its staff and sold its assets to a newly-formed company.
While we haven't seen anything show up in our inbox, OnLive reportedly issued a public statement regarding recent news that it has fired its entire staff and is preparing for bankruptcy.
On Friday evening the popular streaming games company confirmed that the assets of OnLive, Inc. have been acquired into a newly-formed company and is backed by substantial funding. The new company will continue to operate the OnLive Game and Desktop services, support OnLive apps and devices, and support OnLive's game, productivity and enterprise partnerships.
Early Friday morning Interplay and InXile founder Brian Fargo broke the news that a former OnLive employee sent him an email announcing the job cuts, a possible service closure and the formation of a new company. OnLive confirmed with Tom's Hardware that OnLive as a service wasn't shutting down, but didn't confirm or deny the layoffs. "I'm sorry I cannot be more specific," OnLive's Director of Corporate Communications added.
Martyn Williams, a correspondent for the IDG News Service, tweeted from outside OnLive's offices and said employees were walking out with moving boxes. "In the last 20mins have seen three people walk out of #OnLive with leaving boxes. Still unclear what's happening inside," he tweeted
Later reports revealed that OnLive CEO Steve Perlman held a staff-wide meeting with employees and informed them that at least 50-percent of the staff were to be cut, effective as of 4PM PST Friday -- those handed the pink slips were reportedly not offered severance pay. He also reportedly told everyone that OnLive would be filing for Assignment for the Benefit of Creditors (ABC) in the state of California -- an alternative to bankruptcy -- which protects financially troubled companies from creditors.
"A faster alternative to bankruptcy that doesn't involve the courts, it allows OnLive to deal with some of the issues it was facing, most notably an oversupply of servers for the number of users it had signed up," Engadget reports. "The ABC process allows OnLive to be unshackled from the expensive server contracts and bring in a new source of venture capital."
The OnLive "closing" rumor sparked from a comment made by Perlman during the meeting which essentially meant OnLive would cease to exist as a company, and that technically no one would be employed by OnLive. Those who would keep their jobs would be paid by the new company managing the OnLive services.
"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," OnLive's stated. "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," OnLive concluded.
Currently it's unclear who the buyer is, and who escaped the OnLive job cuts. The latest update claims the stock employees owned no longer exists, and that benefits will end after August. "There are offers of contracts to answer questions about important topics like 'where things are,' in exchange for special form stock in the new venture," Engadget reports.
We expect to hear more from the new company responsible for OnLive in the next few days.