Trouble at cloud gaming provider OnLive

[dlevere]

Posted by Soulskill on Friday August 17, 6:10 P.M.

Lashat writes:

News of trouble at cloud gaming provider OnLive is trickling out of various sources. According to Forbes, all employees received their walking papers today.

Rumors of a shutdown, buyout, or re-formation as a new company are plentiful, but the company hasn't announced anything yet. The article quotes an email sent to InXile CEO Brain Fargo from an employee within the company:

'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's Director of Corporate Communications told Forbes, 'No, let me be clear. We are not going out of business.'

While the question of whether OnLive as an entity will continue is still up in the air, an internal source confirmed to Gamasutra that OnLive's entire staff has been laid off, and OnLive employees were seen outside headquarters with 'moving boxes.'

Kotaku says the company has filed for protection against creditors in California (not bankruptcy, but similar).

[dlevere]

By james_fudge

A former OnLive employee (who spoke on the condition of anonymity) described to GamePolitics the last meeting the cloud-based subscription gaming service will ever hold. Earlier in the day this source confirmed a rumor that the company had laid off its entire staff and ceased to exist as a company.

First, our source describes the meeting where employees learned that they had all been let go:

"So there was an 'All-Hands' and we're in this big open space.. he [referring to OnLive founder, CEO, and president Steve Perlman] literally had a presentation that he pitched to us and the punch line was '…and under this variation of bankruptcy which is valid in California the company as of this moment does not exist and portions of it are being acquired by a brand new entity but what that means is all of your options are gone.'"

"The most surreal part of the whole meeting is that he does the entire presentation, he gets to the end and typically at an 'All-Hands' meeting you clap, right? Because that's just the right way to finish a meeting. I think because nobody knew how to react, everybody clapped. It was bizarre... because you're clapping to thank him for taking the easy route out of the company. I think it was because everybody was in such shock that they just didn't know what to do. So I'm sitting there laughing because I'm watching people clapping because they don't know what else to do..."

When we asked our source if anyone inside the company saw today's events coming, they said:

"Anybody keeping score within the company knew that money was getting tight. There were signs of it because budgets had been slashed and there were very long holds on getting business terms signed off on... but the expectation was "oh Steve's going to go and get another round of funding. There were a few people hoping for the acquisition because that's really the end game, but if you were reasonably smart you knew that the likelihood of that was pretty low."

We asked if anyone was getting a severance package from OnLive:

"No. we just got paid for the first half of August. We got 8 hours for the couple of hours we worked into the second pay period. We got our PTO." One thing that is lost under the bankruptcy is contributions to Federal Savings Accounts that employees made: "A lot of my colleagues put money in the FSA for child care, health care, whatever .. they did not have an answer for us, but it sounds like the person that makes the most noise will get reimbursed."

We asked our source what the aftermath of today's news is to employees, and if any of OnLive's employees will be carried over into the new as-of-yet-unnamed entity:

"There were few people who had been given a one-month agreement with the new entity, which he did not explain. basically by using this form of bankruptcy there's a certain amount of protection from the creditors... obviously he lands okay and everyone else is on their own."

Finally we asked our source how many people are going to this new company from OnLive:

"A very small number.. I have no idea what the number is, but i would guess that a few people would stay to keep the service running because if you lose the content the value drains out of the company very rapidly. So they must be keeping enough people around to keep the service running. He'll keep around his core engineering team and people's he's worked with for years I'm sure are staying... and the one guy who knows how the analytics database works for financials (he does all the reporting and everything so) I'm certain he has a position. I'd guess 20 people.

[dlevere]

Opinion: OnLive is a riddle, wrapped in a mystery, inside an enigma

In this op-ed, Gamasutra editor-at-large Chris Morris examines the many unanswered questions surrounding the future of embattled cloud game service OnLive. Whatever becomes of OnLive in the months and years to come, one thing is certain: Its handling of its ongoing transition (or rebirth or metamorphosis - whatever you choose to call it) is going to go down in the halls of video game infamy.