OnLive Service Fires Staff, Appears Near Collapse

Although the company denies that they are going bankrupt, reports are that the OnLive gaming service laid off most of its staff Friday evening.

Company officials have stated that the company is not going under, but has been sold to a third party and will be completely restructured. The company did not say who the new owner is or what exactly the restructuring plan will entail. As of Saturday morning, OnLive was still offering to sign up new users on their Website.

The OnLive service made news at the Game Developers Conference in 2009, when GiN Reporter James Maddox examined the new business model and streaming technology, which had been developed in secret over the past seven years by developer and entrepreneur Steve Perlman.

The way OnLive worked made it different from anything on the market, including the Steam download service, which has become the dominant player in the market. Instead of downloading a game, customers with OnLive would buy access to a new title running on the OnLive servers. The game would then stream to customers with no footprint left behind on the gamer’s computer.

But the service wasn’t perfect. Big games like Call of Duty weren’t available on the service because of latency issues, and some gamers complained that the physical infrastructure for the Internet in the United States couldn’t handle the load of complex titles. Unlike Steam, which downloads the full game to a user’s computer, a process that can take hours, OnLive gamers could start playing almost immediately, but only if their Internet connections were up to a pretty demanding standard. OnLive also offered most games for free for the first 30 minutes, so gamers could try out a title before they bought full access to it.

Streaming has come a long way since 2009, with companies like Netflix offering HD movies streamed right to a console, computer or cable box. But streaming a movie is a bit different than streaming a game. The advances in that area may be coming too late to save OnLive.

The company has not filed for bankruptcy, and insists it will move forward with its new unnamed owner, which it says has significant financial backing. That may be true, but right now, things don’t look very good for OnLive.

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