OnLive sold, will continue operating as “newly-formed company”

By Stephany Nunneley
18 August 2012 14:08 GMT

OnLive has announced it has been acquired, and will remain operating as a “newly-formed company,” with online services remaining unaffected, which is good news for subscribers.

A statement on the sale was released to Polygon by the firm last night, and reads as 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.

“We apologize that we 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 firm did not state whether a company or individual had acquired the cloud gaming service, but a Joystiq report suggests it may be the later.

According to a source speaking with the site – which also happens to have an audio recording of yesterday’s fateful meeting with employees – the individual investor purchased the firm due to being “impressed” with OnLive’s service and performance. These words were reportedly said by OnLive founder and CEO Steve Perlman during the internal all-hands meeting.

OnLive has also filed for ABC bankruptcy, which in California is similar to Chapter 7. This allows a party or “assignee” to take over the company’s assets such as “software, hardware, network architecture, logo,” etc., according to Perlman. This would allow the firm to pay off creditors and protects the company from being declared insolvent over unpaid debts.

The Joystiq source also added some color to the acquisition, stating that the firm had received multiple offers the past few months, including one from computer and printer firm Hewlett-Packard. However, Perlman reportedly wanted $1 billion for the company, and firm on the amount.

“Steve got all excited when Gaikai got acquired [but Sony], because it kind of validated everything we did,” the source said, noting that OnLive’s patent for streaming gameplay happened to go through with the USPTO at the time.

“So all of a sudden, Steve was like ‘When the time is right, we’re going to hit them with our patent because we’re not going to let some two-bit company [like Gaikai] ride our coattails,'” the source claims Perlman said. “I guarantee that some time in the future, Steve is going to go to court and sue the shit out of them for stealing our ideas.”

As far as the employee redundancies and re-hires are concerned, many were given “offer letters to join the newly-formed company”, cites the Joystiq report. In formal company statement above, it claims OnLive has re-hired “a large percent” of its former employees, and plans are to hire more.

It was reported yesterday that over 50% of the staff had been cut, with only key upper management and executive positions retained.

Reportedly, Perlman has also exited the company, but we cannot find confirmation of this at press time.

OnLive is an incubated part of Rearden Companies, which was formed by Perlman in 2000. It is not a publicly traded company, which means there are no SEC filings for us to acquire which would possibly shed light on OnLive’s buyer. Until details on the acquisition are announced formally or leaked, we’ll remain in the dark on the matter.

We’ll update this post accordingly as more news develops on the matter.

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