After dumping its entire workforce and inadvertently setting the rumor mill in motion, OnLive finally offered something of an explanation to quell the worries of its devoted – albeit scant – user base. In a statement, they announced that the company\’s assets had been acquired by a brand new entity and that services would continue uninterrupted to its customers. Relief to some, cold comfort to others. Especially those now officially seeking unemployment benefits.
Money, Money, Money
OnLive did not file for bankruptcy. Instead, OnLive filed for something called an Assignment for the Benefit of Creditors (or ABC, for short). The difference between ABC and outright bankruptcy means that a lot of OnLive\’s staff found themselves rehired in short time, the only real difference being a different company name on their paychecks. ABC will also be used to hasten the sale of OnLive and settle its debts quickly and efficiently, without messy bankruptcy court involvement.
What Went Wrong?
One of the key factors of the sudden, mystery-shrouded buyout is said to be OnLive\’s incredibly high overhead costs, which some sources have quoted at close to $5 million per month. But some are speculating that Sony\’s recent $380 million purchase of Gaikai, another cloud gaming service, was a nail in the coffin.
While the OnLive exec spin could be that Gaikai and Sony set a high price for cloud gaming services that OnLive could only benefit from, rumors indicated that Sony was looking to acquire OnLive before settling on Gaikai. Subsequent rumors added HP to the list of potential buyers – both for a nine-figure sum. Why the sale fell through is anyone\’s guess. One cynical take is it that by going through ABC instead, OnLive was able to rid itself of employee stock and investors\’ stakes.
OnLive Ex-Employees Gutted, But Not Surprised
Reports from those ultimately let go by OnLive suggest that now former employees really got the short shrift. Not only did OnLive CEO Steve Perlman inform his gutted group of loyal employees that their termination would be effective immediately with no severance, but he also dropped a bombshell: those employees with stock in the company would find their shares to be effectively worth nothing.
Many startups like OnLive offer up stock to potential employees in lieu of other benefits, like high compensation, with the employee hoping the company ultimately becomes acquired or goes public. In this best-case scenario, loyal employees are rewarded with a nice payday.
As for investors, ABC allows them to recoup some of their initial investments outside of the courts. The ABC process involves a third party that assumes assets and assures creditors get paid. OnLive investors included Warner Bros., Autodesk, AT&T, British Telecom, and HTC, which made a $40 million investment in OnLive in early 2011.
A Silver Lining?
According to OnLive\’s official announcement, \”almost half\” of OnLive staff were offered positions with the new OnLive at their existing salaries. The unlucky ones were \”given offers to do consulting in return for options in the new company.\” In other words, they can work to re-earn company stock and hope it doesn\’t become worthless too.
Who Owns OnLive?
Lauder Partners, a venture capital firm, has been confirmed as an investor in the new OnLive. There is no word on how much of OnLive Lauder owns. They also had a stake in the old OnLive.
What is OnLive and What\’s So Cool About It?
OnLive is a company that\’s been offering cloud gaming (also known as \”gaming on demand\” or \”online gaming\”) since 2009. Considered to be the future of gaming to many, and a big challenger to the gaming console market, OnLive is available as a console and is compatible with both PCs and Macs, extending playability to Android as well, tablets and smartphones included. There is an iOS version too, but that\’s been waiting for Apple approval for nearly a year and is currently not available to users.
OnLive also offers OnLive Desktop for iOS and Android. This utilizes the same technology to virtualize a Windows desktop for tablets and smartphones, allowing users access to the full Office productivity suite.
Through a somewhat convoluted list of payment options that include monthly fees and one-time title purchases, users gain access to a wide variety of games without the extra financial burden – or the added living room clutter factor – of having to own a high-end gaming PC or expensive console. All games are operated via OnLive servers, which means either through the small OnLive console, PC or Mac with the compatible operating systems (XP, Vista, and Windows 7 for PC and OS X for Mac), both with a reasonably fast internet connection, you can play AAA titles. It works the same on Android tablets and smartphones, allowing users to play games like Batman: Arkham City on mobile devices.