All staff laid off and new company to be formed, suggests leaked e-mail

UPDATE – Report: OnLive closing down

Update: OnLive sells assets to new company

Original story: Cloud gaming company OnLive is shutting down its services, it has been reported.

Taking to Facebook, Wasteland 2 developer Brian Fargo said he had received an e-mail from the firm stating all staff had been laid off.

The message also suggested that a new company will be formed in the wake of OnLive’s closure.

"I wanted to send a note that by the end of the day today, OnLive as an entity will no longer exist," read a statement from OnLive.

"Unfortunately, my job and everyone else’s was included. A new company will be formed and the management of the company will be in contact with you about the current initiatives in place, including the titles that will remain on the service.

"It has been an absolute pleasure working with you and I’m sure our path with cross again."

When contacted by Develop, OnLive stated it does not respond to rumours and had no comment.

OnLive was first unveiled at the Game Developers Conference in 2009, with a number of investors including Warner Bros. and Autodesk backing the platform.

The cloud gaming service was eventually made available in the UK in September 2011, a year after its US launch.

But despite claiming a UK audience of millions, and signing numerous partnerships such as the recently announced deal with crowdfunded console Ouya, the service appears to have failed to gain sufficient traction amongst consumers to stay viable, if the leaked e-mail is to be believed.

OnLive had been linked with a sale in the past, wih Sony mooted as a potential buyer before it swooped in for cloud streaming giant Gaikai instead in a deal worth $380million.

Update: A source from inside the company has allegedly told Kotaku that OnLive is to file for bankruptcy in California after running into financial troubles.

The source stated that a meeting was called at 10am for all staff, in which CEO Steve Perlman said OnLive would be filing for ABC bankruptcy, which would give the company a level of protection from creditors.

Update 2: At least 50 per cent of staff are reported to have been laid off as a third party looks to acquire OnLive, Engadget has reported.

No serverance packages will be offered to laid off staff, claim a number of sources, with stock holdings also worth "essentially nothing".

Staff being kept on at the cloud streaming outfit have allegedly received letters to join the newly restructured firm.

The source also claimed that OnLive had incurred operating costs of around $5m a month, sparking the sudden sale.

Develop will continue to keep you updated as the story unfolds.

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