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OnLive Releases Official Statement Regarding Layoffs

By - Source: Engadget | B 23 comments
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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.

 

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Top Comments
  • 13 Hide
    razor512 , August 18, 2012 10:48 AM
    That is one of the main issues with any service or drm that relies on external servers that you do not own. Your use of the content you paid for is entirely dependant on that company staying in business and still finding it profitable to run those servers.

    They also claim that purchased games are often playable for around 1 year (or less if the game is not being played by enough people)

    On live allows you to outright buy games (though their fine print states that they reserve the right to remove any game for any reason at any time without having to refund your money) (with claims like that, how could they not highly successful with their business model?)
Other Comments
  • 13 Hide
    razor512 , August 18, 2012 10:48 AM
    That is one of the main issues with any service or drm that relies on external servers that you do not own. Your use of the content you paid for is entirely dependant on that company staying in business and still finding it profitable to run those servers.

    They also claim that purchased games are often playable for around 1 year (or less if the game is not being played by enough people)

    On live allows you to outright buy games (though their fine print states that they reserve the right to remove any game for any reason at any time without having to refund your money) (with claims like that, how could they not highly successful with their business model?)
  • 6 Hide
    starcraftmazter , August 18, 2012 11:06 AM
    More like onLAG amirite?
  • Display all 23 comments.
  • 1 Hide
    CaedenV , August 18, 2012 11:37 AM
    it is one thing to pay $8 a month for movie streaming where you can get through bulk content very quickly (and without commercials on most sites), or music streaming services which get you CD or better quality where you can listen to much more music than you could possibly purchase. Even online media purchases (not rentals) like Amazon.com are great because you get your content DRM free for a decent price, so even if (God forbid) Amazon were to fold up and go home, I would still have access to my music purchased, though the online cloud player and other perks would disappear.

    I keep away from services like OnLive for 3 reasons:
    1) if the company were to fold, I would have no recourse (thankfully this folding is being well done, but there is no guarentee that the next one will), and I would have to purchase and start over on the games I was playing
    2) while the lag is bareable where I live, it is still lag and does not compair to a local expierence. Amazing tech... but seariously not ready for prime time yet, and they need to better distribute their servers.
    3) while the price is not bad, I dobut I would get through enough games in order to make such a service worth it to me. I tend to get a game, sit down and play it for 2-3 days, then life happens and I can't sit and enjoy the game again for another 2-3 weeks, typically taking 3-4 months to beat a normal game, and a year+ to beat something like skyrim. Perhaps I would feel differently if I had a POS computer, but as I already have my hardware costs sorted, it is much cheaper for me to wait till a game is 6mo to a year old, and then pick up a GOTY edition on sale, or wait for Steam to have a good sale.

    Besides... once you buy minecraft you really don't need any other games ;) 
  • 0 Hide
    rantoc , August 18, 2012 12:04 PM
    Hardly surprising, the internet is not ready for this by a long-shot and few gamers like to have their experience rendered in lowest quality.

    This time it seems to be ending well for the customers but it should also be seen as a warning what will happen if a cloud company that streams your content go down completely - You loose it ALL.
  • 0 Hide
    invlem , August 18, 2012 12:42 PM
    Considering the bandwidth requirements for customers, the on live idea is ahead of its time... Currently ISP throttling and bandwidth caps just don't allow for a service like this to become really popular.

    Netflix works because you don't watch movies 4-8 hours a day, every day so the bandwidth usage isnt as high, with video games people play every day, for hours, thats a lot of bandwidth to eat up since you're streaming constantly as you play.
  • -8 Hide
    killerclick , August 18, 2012 12:47 PM
    Their problem is twofold:
    1) they started this in the US where there are silly things like download caps and people not having an Internet connection 100% of the time. This kind of thing would work better in Seoul, Tokyo and places like that.
    2) they started this in a world where games like Angry Birds, Fruit Ninja, Cityville pass for interactive entertainment.

    I'm not really obsessed with "owning" games, it's just a game and if one company goes down, you can move to another, no big deal (hopefully you can transfer your saves). Imagine a game coming out that requires a $600 GPU, a $150 PSU and a $200 CPU to play well, but you can instead play it on a Celeron through a service like OnLive for like $0.5 a day. That would be a good deal, right?
  • 0 Hide
    jaquith , August 18, 2012 1:04 PM
    Perhaps now some will understand why Steam's Gabe Newell statements considering Windows 8 "a catastrophe", in comparison to Valve's Steam the company OnLive is nothing.

    DRM is here to stay so the only problem is identifying the companies that have a solid balance sheet and are profitable.

    In further reading I noted the following update to Richard Lawler's story:

    Quote:
    "The source expects OnLive to go after recent Sony acquisition Gaikai for infringement of a game streaming patent, so stay tuned."
  • 0 Hide
    of the way , August 18, 2012 1:19 PM
    caedenv...or music streaming services which get you CD or better quality...


    Where the pants have you found that?
  • 0 Hide
    atikkur , August 18, 2012 2:14 PM
    killerclickTheir problem is twofold:1) they started this in the US where there are silly things like download caps and people not having an Internet connection 100% of the time. This kind of thing would work better in Seoul, Tokyo and places like that.2) they started this in a world where games like Angry Birds, Fruit Ninja, Cityville pass for interactive entertainment.I'm not really obsessed with "owning" games, it's just a game and if one company goes down, you can move to another, no big deal (hopefully you can transfer your saves). Imagine a game coming out that requires a $600 GPU, a $150 PSU and a $200 CPU to play well, but you can instead play it on a Celeron through a service like OnLive for like $0.5 a day. That would be a good deal, right?


    you can gaming decently with $300 GPU , $70 PSU, $200 CPU. with cloud gaming you need super high quality internet connection with no caps data plan.. in my country it costs $90/month (2mbps/DSL/no caps).. in 7 months cloud gaming,, you already spent 1 decent upgrade cost gaming machine.
  • 0 Hide
    Afrospinach , August 18, 2012 3:37 PM
    john_4" popular streaming games company " going bankrupt, isn't this an oxymoronic statement. If they were so popular why are they going bankrupt?


    Poor business model? Bad management? I should imagine a company selling their product for unsustainably low prices would be very popular with customers.
  • 2 Hide
    matt_b , August 18, 2012 5:45 PM
    razor512That is one of the main issues with any service or drm that relies on external servers that you do not own. Your use of the content you paid for is entirely dependant on that company staying in business and still finding it profitable to run those servers.They also claim that purchased games are often playable for around 1 year (or less if the game is not being played by enough people)On live allows you to outright buy games (though their fine print states that they reserve the right to remove any game for any reason at any time without having to refund your money) (with claims like that, how could they not highly successful with their business model?)

    Combine all of this with the expensive overhead for all of the equipment they need to run to deliver the service, I'm just surprised it lasted as long as it did before it came to this. Steam and Origin have a huge advantage here, they require a fast networking/storage center and basically not much else. Onlive is this, plus some pretty hefty amount of processing and graphic-rendering hardware as well. Trying to entice a much larger console market to try their service as well, and the level of difficulty becomes clear. Hard to find sustainable net profit after all that is factored in to the bottom line while charging a competitive enough price with said competition.
  • 0 Hide
    olaf , August 18, 2012 6:46 PM
    damn it ... cloud gamming needs to die, period, i want my own pc, i don't want lag, and if i chose to play something in single player i don't want it to be internet dependent ...
  • 4 Hide
    siuol11 , August 18, 2012 7:32 PM
    This seems like a really convenient way to dick a lot of employees out of severance pay.
  • 0 Hide
    alxianthelast , August 18, 2012 8:41 PM
    killerclickImagine a game coming out that requires a $600 GPU, a $150 PSU and a $200 CPU to play well, but you can instead play it on a Celeron through a service like OnLive for like $0.5 a day. That would be a good deal, right?


    It is an argument that makes an internet connection the back bone of your home entertainment system.

    If you don't mind connecting to a service that isn't quite on the level of consoles.. or if it exceeds the quality of a home computer (allowing you to run games your PC or laptop can't).. then it is worth it and will eventually spell the demise of dedicated disk reader based consoles.

    There's another argument that streaming the game to a console/set-top-box or PC that runs a client so that you can have a power CPU and GPU, gobs of ram and the OS of your choice, so that the online service is mainly for DRM, content distribution and customer service, community contact.. then lag, resolution.. mods etc are less of an issue for the average gamer. It is sad that OnLive didn't go that route and ensure that the game could gracefully deal with disconnections, and still function while offline for long periods... but what can you do (if you're EA you could keep upgrading Origin to work that way...)
  • 1 Hide
    Cantisque , August 18, 2012 8:46 PM
    PC's can be upgraded, but Internet connections are totally dependent on where you live.
    OnLive would be a good idea in an alternate universe where Netbooks became mainstream.
    Instead of being purely streaming, it should by default download the entire game as other DDS stores do, but offer streaming mode extra for those who have lower-spec PC's that can't run the game well, or don't have the required hardware/OS for it.
    Interested to see who bought it, would be nice if it were Valve and they use it as described above.
  • 0 Hide
    rantoc , August 18, 2012 9:20 PM
    killerclickImagine a game coming out that requires a $600 GPU, a $150 PSU and a $200 CPU to play well, but you can instead play it on a Celeron through a service like OnLive for like $0.5 a day. That would be a good deal, right?


    Accept that the allotted GPU power your video stream receive is down to less than a 100$ gpu equivalent, most games on the onlive were rendered at absolute bare minimum quality. It was then compressed making the quality even worse than the lowest possible. But yeah, lower than low quality is better than not being able to play it at all...
  • 2 Hide
    jalek , August 18, 2012 11:33 PM
    So the service remains, they just eliminated the staff that put it together and screwed whatever existing investors they had. Awesome.
  • 0 Hide
    cybrcatter , August 18, 2012 11:58 PM
    hah!

    That is all.
  • 2 Hide
    gsacks , August 19, 2012 12:18 AM
    Having been in a similar, but different situation with a company that I have worked for, the big 'screw you' in here is the fact that the stock that the employees had options in no longer exists. Employees at a start-up often (always) take a significant discount on their wages is exchange for stock options. While there is never a guarantee that those options will be worth anything, there is a big difference between 'company failed', and 'company engaged in a paper transaction to effectively rid itself of those options.' It sounds like this is the latter scenario. Everything about Onlive will continue under a new corporate entity, but the employee stock options have been purged. If I was one of their employees I would be steaming about now. (Pun intended).
  • 3 Hide
    Draconian , August 19, 2012 12:37 AM
    Legally, I don't think they can shut the service down. They guaranteed to their customers that games purchased on the service would remain available until 2014. Although, after that time, I imagine the service will cease to exist.

    Sucks for the people who spent hundreds of dollars buying games on there thinking OnLive would be the future of gaming.
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