On-demand video gaming service, OnLive has released a statement that the company's assets have been sold to another company.
Users of the gaming service will not experience any interruption of services, according to the statement. OnLive will also seek to hire back a large percentage of its former employees.
ComputerWorld's Martyn Williams via Twitter first reported the news of the company's layoffs, when he tweeted that he saw numerous employees leaving the company headquarters with packing boxes. Later rumors of the company's failure and potential bankruptcy began to circulate, before OnLive CEO was able to comment.
It appears imprudent spending caused the gaming company's downfall. The streaming video game service OnLive uses powerful servers to streams games to inexpensive TV adapters. The company is using around 8,000 of these servers to support only about 2,000 users online. The idea of streaming games through an inexpensive device was innovative, but not cost efficient. Gaming site Engadget reported that OnLive's operating costs were around $5 million a month.
According to the report from ComputerWorld, OnLive will be filing for Assignment for the Benefit of Creditors (ABC) in the state of California. ABC is an alternative to bankruptcy, which protects financially troubled companies from creditors.
The full statement from OnLive follows:
"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."
"While we're not commenting on additional details, the reports have been way overstated, perhaps because we were unable to respond to initial enquiries until the transaction completed. The management team is intact, the company has substantial funding and we have all our current businesses to run."
