OnLive Cloud Gaming Acquired, Will Continue Operations: Report

OnLive confirms the company has been restructured, avoiding bankruptcy and continuing its cloud-based gaming service.

Cloud gaming platform OnLive has been acquired but will continue to operate its services, it said in a statement sent to technology blog TechCrunch following widely circulated rumors that founder and CEO Steve Perlman had left the company in the immediate wake of mass layoffs.

"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 statement said. "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."

The statement also took the opportunity to apologize that they 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," the email concluded. According to the TechCrunch article, the buyer is requesting the intellectual property, branding rights and patents owned by OnLive, but plans to continue running the gaming platform.

When the company entered the market in 2009, it was hailed as a game-changer that could serve as a model for the future of video game distribution. The service includes standard online game service features such as gamer tags, user profiles, friends, and chat. In addition, an evolving slate of features will include 3D graphics performance, instant-play free game demos, multiplayer across PC, Mac and TV platforms, Brag Clips video capture and posting, massive spectating and cloud-saved games, which allow users to pause and resume from anywhere, even on a different platform.

But OnLive struggled with growth challenges, abandoning its early pricing structure based on subscription fees and faced heavy competition from production heavyweights like Electronic Arts (EA) and Ubisoft. Services offered by competing hardware-based competitors like the Nintendo Wii, Sony PlayStation 3 and Microsoft Xbox 360 also added pressure to the business as the cloud computing model became more widely adopted.

"I think publishers saw OnLive and had memories of what the music industry did with MTV," Robert Levitan, CEO of cloud content delivery network Pando Networks, told CNN. "Why license out your content to a third-party distribution site when you can do it on your own? "OnLive may be the future, but the future is not here today."