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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.

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  • 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.
    Reply
  • 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).
    Reply
  • 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.
    Reply
  • gamerk316
    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...
    Reply
  • 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 :|
    Reply
  • 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.
    Reply
  • beardguy
    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.
    Reply
  • ddpruitt
    9394697 said:
    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.
    Reply
  • beardguy
    ^Oops that was supposed to be @KawiNinjaZX
    Reply
  • chomlee
    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.
    Reply