Source: OnLive Filing For A Form of Bankruptcy, New Company to Take Its Place

OnLive, the pioneers of cloud gaming, are in dire straits and are preparing to file for a form of bankruptcy, a source inside the company told Kotaku today. An OnLive spokesperson maintains that the OnLive service, which enables people to stream games to their computers and tablets without the need for dedicated hardware, will continue. But it seems as if the company itself is hitting some very hard times.

Note: This story originally indicated that OnLive had filed for "bankruptcy", which carries certain legal definitions. We've seen received clarification that OnLive filed for something similar, but technically different.

The source says that everyone at the company knew things were tight. This morning, an all-hands meeting was called at 10am this morning [EST] where CEO Steve Perlman said that OnLive would be filing for ABC bankruptcy for an alternative to bankruptcy called an Assignment for the Benefit of Creditors, or ABC, in the state of California—a status that affords financially troubled companies a level of protection from creditors. Perlman also said that the company as it stands now would cease to exist and that no one would be employed by OnLive. A subset of employees would be brought on to the company created from the remains of OnLive.

[Original story follows:]

What exactly is going on with one of the leading cloud gaming companies? OnLive may be shutting down or they may be transforming themselves.

Brian Fargo, game developer and CEO of InXile Entertainment, tweeted earlier today that cloud gaming company OnLive was shutting down. Mashable then reported that OnLive had laid off its entire staff and has shut down operations.

The e-mail in question, sent to Kotaku by Fargo, follows:

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.

When reached on the phone, Fargo said that the sender of the email then tried to recall the message. Kotaku reached out to OnLive for clarification and received this message in response.

We don't respond to rumors and have no comment.

The exciting news is the first VIZIO Co-Stars (Google TV stream players) with the OnLive app built-in have just arrived in customer homes, and our second of three 'Indie Giveaway Weekends' is going on now. OnLive users can get a free copy of the award-winning games Space Pirates and Zombies and SpaceChem (more details on our blog here:

When asked if any layoffs had happened, an OnLive representative told Joystiq that "the OnLive service is not shutting down." They just managed to skip all the bad-news parts.


    Oh mannnnnnnnn, I hope this doesn't affect OnLive being on the Ouya!

      Since it never reached Australian shores (and probably wouldn't have any time in the foreseeable future), I'd say the impact would be minimal. Still, it's an interesting development in a time when games are supposed to be moving into the digital age. It will be interesting to see how other cloud streaming services and the head honchos leading the console wars will react to this.

      Also, I just noticed that this development occurred suspiciously close to when GameStop announced they would be competing in the streaming service market. I'll save my speculation, but it would be interesting to see if the two are connected.

        How have video games not always been part of the 'digital age'?

          When they are on physical discs/cartridges.

            Those physical dicks/cartridges were stored in digital.

    Onlive was a first in first out company, a company where they are first into an emerging field, the one that takes all the risks and experiment while the big guns sit in the background and watch before they come in with big budgets that can crush all the small guys. So their sole purpose is to be bought out by a big guy just before they come in, usually one that is behind others in catching up or that they have built have a strong name and market to be worthy of combining with their plans forward.

    Onlive going bankrupt meant that they couldn't find a buyer, and that they weren't big enough or had a good direction like Gaikai to be bought out by the big guys. I am not too concerned tho, its sad watching the ones who take the risk go down, but when it comes to that field, Google, Apple, MS and SONY are big players in their area so the future is bright here.

    OnLive is fucking shit anyway, sucks about the guys losing their jobs but the service sucks. I don't know who'd be stupid enough to pay for games you don't own, can't access the files to and basically don't have any rights to

      Well, I wouldn't word it that way, but I'm definitely not a fan of just buying access to a game, which can be taken away from you whenever without your consent.
      If Steam had a service where I could stream games and download them too, I'd be all for that.

        My comment was worded unnecessarily harshly but that's my own opinion. I prefer to have the game itself in my possession, preferably a physical copy although I will compromise and use Steam/ if needed.

    This is a surprisingly big setback I reckon.

    It's a great idea, but was always doomed to failure. Bandwidth caps have become more prevalent in the US and europe, and in the end, gamers tend to want to own their game. Can you mod onlive skyrim? Is there onlive skyrim? But I was actually thinking of seeing if there was a demo for their service just so I can say I gave it a look, guess I will have to wait.

    I always said this was never going to work. It's nice to be right but kinda sad that many people will be loosing thier jobs.

    Viz or Del Rey winning is fine but I think Del Rey has a hheigr percentage of excellent titles and put more thought into what they do. I notice Viz production has gotten better (especially covers) and it feels more extras are being included in each book. The $8 Shonen titles not so much, but the $9.99 books like Kekkaishi have several extras in the back. In Kekkaishis case they hired a designer for the book too (as opposed to in-house or re-formatting the original japanese).

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