Last Friday, reports came in saying that cloud gaming service OnLive would potentially be closing down and that the company had fired their entire work force. Brian Fargo of InXile Entertainment tweeted about an e-mail he received that stated that OnLive was to close down. The e-mail specifically stated:
I wanted to send a note that by the end of the day today, OnLive as an entity will no longer exist. Unfortunately, my job and everyone else’s was included. A new company will be formed and the management of the company will be in contact with you about the current initiatives in place, including the titles that will remain on the service.
It has been an absolute pleasure working with you and I’m sure our path with cross again.
OnLive soon responded to these reports, saying that the company would not be closing but declined to comment on the rumors of layoffs. In reality the company has been purchased by Lauder Partners, a company that invested in the cloud streaming service in 2009. Although an official figure hasn’t been disclose, the company will continue to be called OnLive. One of the major issues of these events was the fate of the employees, among other things, which were clarified upon in a statement:
We can now confirm that the assets of OnLive, Inc. have been acquired into a newly-formed company and is backed by substantial funding, and which will continue to operate the OnLive Game and Desktop services, as well as support all of OnLive’s apps and devices, as well as game, productivity and enterprise partnerships.
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. 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.
Reports have since come in claiming that the user base of the OnLive service may be as low as 1,600. However, Steve Perlman, the founder, president and CEO of the OnLive service who received no compensation in the deal spoke, on these reports:
“There’s no way to exactly estimate how many servers we’d need… So we literally bought thousands of them, and all the equipment and networks to go with it. If you’ve got 8,000 servers and 1,600 users, how could we ever get to cash flow positive, right?”
Analysis: So in the end, this was a total mess of back and forth reporting between news outlets, but now we know the company has been purchased by a previous investor. But things still don’t look good for the company, especially if that number of 1,600 users is anywhere in the ball park of the actual figure.
Despite all the good things people may have said about the service, the truth is that few truly had any way of effectively using OnLive. It’s a service with plenty of good deals if you have a great Internet connection, but that’s a hurdle a significant amount of people simply aren’t able to overcome. Add that to the skepticism that is still held towards digital distribution, in that we essentially pay to have access to a game rather than outright owning it, and you can see why the company may be struggling.
Nevertheless, I send my best regards to those who were affected by layoffs, and hopefully, everyone will be rehired once again.