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The Rise and Fall of OnLive

By the time this article goes up, the news will not be new or interesting to anyone, but it seems like everyone in the journalism industry is rendering their opinions on the following topic, so why not jump on the band wagon and see what can be learned? Anyway, here is Gamer Codex’s exploration into the events surrounding OnLive’s bankruptcy.

The Backstory & Cause of Bankruptcy

With all of the chaos that has ensued, it might be best to step back a bit and examine what OnLive did right before seeing how everything went so wrong.

Back in June 2010, the company’s long-awaited cloud gaming service launched with plenty of media buzz and a fair amount of scepticism, which was understandable at the time; the limitations presented by the settings on people’s computers and their variable Internet connections would look bad on any project. However, with the removal of subscription fees and several additions to the service, including the ability to try free demos and trials of games, OnLive found itself the inheritor to a niche fanbase that was interested in what they had.

Besides their attention to complaints and constant desire to improve the system, OnLive also had financial and development support by many important figures and companies in the gaming industry. Their investors included, but were not limited to, Warner Bros., AT&T Media Holdings, Inc., and Lauder Partners. OnLive also had a working relationship with 50 developers, such as the aforementioned Warner Bros., Atari, Epic Games and Ubisoft.

With so much support, and with their ability to seemingly provide for their customers indefinitely, how did they fall into bad times? According to his own testimony, OnLive’s very own C.E.O, Steve Perlman, sent the company, and its service, into bankruptcy. The entire record is available at this link – http://www.theverge.com/2012/8/28/3274739/onlive-report – but it details how Perlman steadily alienated esteemed developers, ignored generous offers from potential investors, and even manipulated an existing legal loophole to cash in on the company’s declining stocks for personal safety.

Now, to be fair, Perlman could not have controlled the limited user base of 1’600 that OnLive generated in its four year existance, nor could he have helped the low income from the service. It was, however, his duty to look out for the interests of his company and his employees, whom he essentially screwed over when he let his ego and selfish desire get the better of him.

The Final Days of OnLive

Regardless, OnLive was forced into a situation where it could only spiral into an unending decline. On August 17th, 2012, a famed meeting occurred at OnLive, in which Perlman announced to his entire staff that not only were their stocks worthless, but that he would be forced to let all of them go. He also enacted the use of the Assignment for the Benefit of Creditors, which allowed him to sell OnLive’s assets, including his own stake in the company, to whomever he wished.

This lead to a buyout by, surprisingly, Lauder Partners, one of OnLive’s own investors. The company was rendered solvent, but adding to the intrigue of the situation was the announcement that a new company, also named OnLive, would be run by Lauder Partners and would take over the existing cloud gaming service as well as its associated assets.

The Future of OnLive

The future is not set in stone, and no one proves this more than OnLive. With the hope for rebuilding and reformation under Lauder Partners, this new incarnation hopes to keep the service running for its apparently loyal, if niche, fan base.

They certainly have a few steps in the right direction. First, they will not restart the servers, opting to keep everyone’s profiles and account information intact. Second, Perlman has opted to resign from this new company, though this is due more to returning employees stating it as a condition for their work rather than genuine regret.

It’s been a tough road for OnLive, and the future is not looking much easier for them. Many good employees were lost in the layoffs, and fewer were given options in this new company. However, given that Lauder refused to give up on the idea of cloud gaming, it’s safe to say that we shouldn’t necessarily write it off either. Keep reading, gamers, and keep the hope alive.

-Kurt Hvorup, Founder and Administrator

 

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