UPDATED: 1,600 users – the story of OnLive’s collapse starts to emerge

The truth about OnLive’s demise will take time to emerge – but already a solid picture is being formed.

And at the heart of it are user numbers.

OnLive has never given out detailed user numbers, beyond vague statement of phenomenal interest” and growing user bases”. But if the numbers cited by boss Steve Perlman are correct, then the true picture is more grim that anyone had suspected.

"There’s no way to exactly estimate how many servers we’d need so we literally bought thousands of them, and all the equipment and networks to go with it," Perlman told employees at a meeting yesterday morning, according to Joystiq. If you’ve got 8,000 servers and 1,600 users, how could we ever get to cash flow positive, right?"

This effectively means that OnLive was forced to spend huge amounts on maintaining and renting servers that were not being used. Whether that 1,600 figure refers to subscribers or active users is unknown. But either way it’s a disastrously low figure.

"I’ve been a non-stop fundraising machine," Perlman added. "And I finally got to the point where I just could not bring in enough funding to carry this thing forward.”

An administrator then added that: "All of us, technically, as of today, our jobs have ended – our current jobs with this company.”

The exact scale of the job losses remains unknown, but despite some claims to the contrary last night it certainly sounds like the majority.

"Here’s the tough part, and this is the thing I’m very sorry to say: it’s just not possible for one individual in a startup – whether it’s that old startup or this new startup – to bring in this many people into a company," Perlman admitted. "The people that come on board are the essential people, as needed, to go and accomplish that goal of getting this thing to cash-flow positive.

"The people that are gonna be coming on board here, that will come out of the group. I’m gonna tell you, most of the people will not be coming on board.

"I’m the one that brought you here. I’m the one that ultimately made decisions. And I’m the one that ultimately takes responsibility. So I am sorry, and it didn’t end up exactly as we’d hoped.”

So what of this mystery investor? "He’s an extraordinary guy and a very accomplished and well known venture capitalist who is very wealthy and believes that OnLive is the entire future of everything.”

UPDATE: It has since been clarified that the 1,600 user number referred to the service’s concurrent users.

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