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OnLive: It Was a Restructuring Thing

By - Source: OnLive PR | B 11 comments

It's another official announcement, this time in PR firm and directly from an OnLive rep.

On Sunday night, a new spokesperson for OnLive sent over the full announcement regarding what happened to the former company and its employees. Apparently what was distributed on Friday was just a quick rumor killer to address all the fiction writers on the Internet. This new rep, Jane Anderson, sent along a formal explanation, adding that only execs in the company had access to the information about the asset acquisition before Friday morning.

"Much of what we are seeing is fiction," she told Tom's. "It's only been 48 hours since the new company has existed and will update as we have news."

According to the new, detailed announcement, all of OnLive's assets were acquired by a newly formed company on August 17th that will continue to operate under the OnLive name. 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," reads the announcement. "An affiliate of Lauder Partners was the first investor in the newly-structured company, holding the view that OnLive is the future of computing and entertainment, and a passion to see OnLive’s breakthrough technology continue to grow and evolve. The new company structure enables OnLive to do so."

It was OnLive Inc.'s board of directors, facing difficult financial decisions for the company, who determined that the best course of action was a restructuring under an "Assignment for the Benefit of Creditors."  The assignee of the company’s assets then sold all of OnLive, Inc.’s assets (including its technology, intellectual property, etc.) to the new company.

"Unfortunately neither OnLive, Inc. shares nor OnLive staff could transfer under this type of transaction, but almost half of OnLive’s staff were given employment offers by the new company at their current salaries immediately upon the transfer, and the non-hired staff will be given offers to do consulting in return for options in the new company. Upon closing additional funding, the company plans to hire more staff, both former OnLive employees as well as new employees," the statement reads.

So far the OnLive Service itself has been in operation 24/7 without interruption since its launch over two years ago (time flies), and is expected to continue to operate smoothly under the new company. All games, products and services remain available, and the company has new product and partnership announcements on the way.

"The asset acquisition, although a heartbreaking transition for everyone involved with OnLive, allows the company’s core innovation and ongoing offerings–the product of over a decade of hard work transforming the OnLive vision into reality–to survive—and continue to evolve," the statement reads.

If that didn't help clear the air, the new OnLive company has provided a FAQ which talks about the employees, stock and Steve Perlman:

Q. Will users see any change in the OnLive Game or Desktop Services? What about their purchases?

A. Users should see no change in the OnLive Game or Desktop Services. All of their purchases remain intact and available. OnLive has been up 24/7 since launch over two years ago and expects to remain so. OnLive has over 2.5 million subscribers, with an active base of over 1.5 million subscribers, connecting from a vast range of devices and networks, with many sessions running for hours. The user base is growing rapidly with OnLive’s addition into recently announced devices and TVs from major manufacturers. We expect this growth to continue under the new company.

Q. Is there any cash or stock in the new company provided for any OnLive, Inc. shares?

A. Unfortunately not. The nature of the transaction is such that only assets, not shares, were purchased. This is true for all shares of OnLive, Inc., whether held by investors, employees or executives.

Q. Did Steve Perlman receive stock or compensation in this transaction?

A. Like all shareholders, neither Steve nor any of his companies received any stock in the new company or compensation in this transaction at all. Steve is receiving no compensation whatsoever and most execs are receiving reduced compensation to allow the company to hire as many employees as possible within the current budget.

Q. Did all OnLive, Inc. assets transfer into the new company? Are any assets held by any other party?

A. All of OnLive, Inc.’s assets (e.g. technology, patents, trademarks, etc.) were transferred to an assignee, which then sold the assets to the new company. There was no transfer to any other party.

Q. Have OnLive, Inc. employees been offered positions in the new company?

A. Almost half of OnLive’s staff were offered employment at their current salaries in the new company immediately upon the transfer, and the non-hired staff will be given offers to do consulting in return for options in the new company. Upon closing additional funding, the company plans to hire more staff, both former OnLive employees as well as new employees.

Our best wishes go out to those who couldn't stay with the new company.

 

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Display 11 Comments.
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  • 5 Hide
    Anonymous , August 20, 2012 6:01 PM
    You go capitalism!
  • 8 Hide
    reviewer889 , August 20, 2012 6:06 PM
    Why can't EA restructure and lay everyone off and no longer make video games.
  • 8 Hide
    Anonymous , August 20, 2012 6:47 PM
    So nice to see them screw over their employees and investors, must give them a nice fuzzy feeling. Seriously though, if this is how they run their business, I don't know if it'll stick around long term. I'll be avoiding their services for sure, how long until they do the same to their customers?
  • -5 Hide
    teh_chem , August 20, 2012 6:59 PM
    brightbladeSo nice to see them screw over their employees and investors, must give them a nice fuzzy feeling. Seriously though, if this is how they run their business, I don't know if it'll stick around long term. I'll be avoiding their services for sure, how long until they do the same to their customers?

    It's how business works unfortunately. Would you rather companies not restructure, and continue to operate with heavier losses otherwise and just flat-out die? There's not really much you can do. It's one of the few options to actually keep the business and service going. OnLive has no loyalty to their customers, they have loyalty to their bottom-dollar. If their business isn't profitable, why would they continue operating just because they have customers? It's not like this was some irrational unwarranted decision.

    Though the non-transfer, non-purchase of company stock does seem like a good way to circumvent a lot of costs. Where did the "newly formed company" come from, I wonder...?

    OnLive is still ahead of its time.
  • 5 Hide
    svdb , August 20, 2012 7:42 PM
    Assets repurchasing is just a financial ploy which only benefits a small number of share holders. There are enough healthy companies out there who were saved without resorting to such extremes to show this is not the "only way" a company can be saved.
  • 7 Hide
    chomlee , August 20, 2012 7:57 PM
    I owned shares in a startup company and a similar thing happend. The Company was merely listed as the distributor and the guy who owned the actual intelectual properties was chairman of it. He simply dissolved the company and kept the patents for himself, formed a new company, and got away with it. He basically walked away with millions of dollars in his pockets that he had sent to the Caymens etc and nobody could do anything about it.

    As for the comment earlier that the Onlive's loyalty. They are supposed to have loyalty to the shareholders. This business of companies just folding up filing for bankrupcy or selling a business leaving the stockholders high and dry is rediculous. What I also don't understand is if they "Sold" the business, where did the money go????? I wouldn't be surprized if the boardmembers formed their own company, sold the company to themselves for $.01, and wiped out any dept to investors. If that is the case, they should all go to jail.
  • 5 Hide
    rantoc , August 20, 2012 8:19 PM
    Aww the spineless suits can't make a statement of their own. They think they should be paid to take responsibility but in the end they take none!
  • 5 Hide
    teh_chem , August 20, 2012 8:34 PM
    I didn't quite understand from this article what happened. bit-tech had a slightly more detailed synopsis.

    Speaking for both OnLive-1 and OnLive-2, the company's board has issued a statement explaining that OnLive-1's assets were transferred to a third-party who then sold them on to OnLive-2 - neatly bypassing rules on simply changing the name of your company to continue operations while avoiding debt repayment.

    The stockholders, meanwhile, get bupkis: only assets were transferred to OnLive-2, meaning that investors in OnLive-1 have just seen their money disappear and their shares rendered worthless. Shares in OnLive-1 will not, in other words, be exchanged for shares in OnLive-2.


    I retract my previous statement--this isn't just business...I agree, things like this should be illegal. I'm not so much caught up in the fact that people lost their jobs because in a standard "restructuring" (or downsizing), people will lose jobs regardless. But man, exploiting a workaround so blatantly...THAT's what I missed at first, which tom's didn't showcase very well.

    I'd be shocked if onlive receives anymore non-customer funding, showing perfectly well that they have no problem playing games and nullifying stock value. So they took the money fronted by investors for promise of a share of the company, and are essentially removing their share of the company but keeping the money. Genius. Despicable.
  • 5 Hide
    bustapr , August 20, 2012 9:04 PM
    must feel nice to cheat your way out of contracts
  • 0 Hide
    theconsolegamer , August 21, 2012 6:41 AM
    Y U NO GO UNDER ONLIVE! Your Cloud service is gonna ruin gaming as we know it! JUST DIE ONLIVE, DIE!!!
  • 0 Hide
    teh_chem , August 21, 2012 12:14 PM
    theconsolegamerY U NO GO UNDER ONLIVE! Your Cloud service is gonna ruin gaming as we know it! JUST DIE ONLIVE, DIE!!!

    Gaming as we know it will sadly be gone soon. Services like OnLive will be what PC gaming will become, though there's a lot of work to be done.