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Embattled OnLive details 'heartbreaking transition'
Embattled OnLive details 'heartbreaking transition'
August 20, 2012 | By Mike Rose

August 20, 2012 | By Mike Rose
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    17 comments
More: Console/PC, Business/Marketing



Cloud game company OnLive has lifted the lid on the circumstances which led to it laying off its entire workforce and selling all of its assets to a new company.

Reports indicated last week that OnLive had sold all of its assets to an unnamed company, and had let go of all of its staff, although it said that it planned to re-hire a large percentage of these back to the new start-up.

In a new statement, OnLive revealed that all of its assets have been sold to "a newly formed company" that will operate under the OnLive name, with investment from firm Lauder Partners.

This move has been made through an "Assignment for the Benefit of Creditors", which is essentially an alternative to bankruptcy, and allows OnLive to transfer its property to a third-party company in a timely manner.

The company said that it was "faced with difficult financial decisions" and was forced to lose its shares and staff as these could not be transferred under the ABC deal. However, almost half of the laid off staff have been offered employment at the new company, while the rest of the ex-staff will be offered consulting work for the company, said the statement.

OnLive also plans to hire back more of its former staff once it has closed additional funding, it said.

"The asset acquisition, although a heartbreaking transition for everyone involved with OnLive, allows the company's core innovation and ongoing offerings to survive and continue to evolve," the statement added.

OnLive also attempted to quell speculation about the move via a formal FAQs statement, which explained that OnLive users should not notice any downtime to the service or changes to their purchases.

The questions also noted that Steve Perlman, founder of the company, did not receive any stock or compensation from the transaction, while reiterating that all of OnLive's assets were transferred to this one new company, with no other transfer taking place.

Elsewhere, smartphone maker HTC announced that as a result of OnLive's restructuring, the company will lose the $40 million investment it made in OnLive last year.


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Comments


Paul Shirley
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After stiffing HTC for $40mil I don't see 'new OnLive' getting many corporate partners. Without them it's hard to see it succeeding 2nd time round.

Kyle Redd
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My guess would be that any current or future investors would be looking for a piece of the eventual profits from the cloud gaming patents held by Perlman. From what I understand the guy has a bundle of them.

But yeah, if OnLive couldn't attract enough consumer interest when it was the "future of gaming," they're going to have a hell of a time getting any converts now. I would be surprised if the core OnLive platform is still operational 18 months from now.

Nooh Ha
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@Kyle Redd

Completely agree with your patent point. Perlman on behalf of OnLive secured a load of cloud patents - in stark contrast to all the other early and current clould gaming companies including Gaikai.

Merc Hoffner
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OK, so this didn't work with a centralized server. Apparently they guessed the demand wrongly and were tied into server contracts they couldn't scale down.

Let me ask the community a technical question:

Could this be made to work p2p? i.e., could users dynamically give up spare compute time so that other users may experience a game. Or rather can lots of unused low-power machines be pooled to generate one virtual high-powered machine? Would this be scalable? Can their rendering efforts be intelligently split and recombined? Can the latency be managed? Would the users' locality improve latency/bandwidth? Can unit failure be managed? Would encryption be secure enough?

Genuinely asking here. You see I wonder if such a system could work with a fixed platform like PS3? If perhaps Gaikai might be planning on turning the community of PS3s into virtual PS4s? Or is this bunkum?

Alex Nichiporchik
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You need to run an instance of a game, so actually fire the game up and have it running and then suspend when not used.

I like the idea of a skype or torrent nod-hive powering an entire network, but odds are it won't work -- how would you distribute the game instances across those devices?

Brian Devins
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This wouldn't work, unfortunately. The latency would be too high and unpredictable, and pooling many low powered machines would use exponentially more electricity than a single onsite processor. Some degree of centralization is necessary for such a time-sensitive task as realtime interactive streaming.

Duong Nguyen
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Sure anything could be made to work, but you'll have an enormous obstacle ahead of you. You'll have to resolve the licensing issue of the games, secure remote access, shared cpu / gpu and p2p topology and fault tolerant systems. As bandwidth increases, which is inevitable, there will come a tipping point where this does become technically feasible but I don't know if it can ever be commercially feasible.

However you can make a network of CPU into a supercomputer of sorts and host computationally massive worlds, potentially much larger than any MMO that ever existed. Now that's a project :)

Merc Hoffner
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Thanks for your responses. They make a lot of sense. Was preparing a long reply but it got too long. Basically, dividing of tasks is something supercomputing and now cloud and even p2p based scientific studies have had to deal with for a while, and if we look to that industry then, while many of the problems are still problems, there has been steady progress in management, virtualisation, statistical failure tolerance and recovery, security and computational interdependence challenges. If one were to regard unacceptable latency as a type of node failure, then if critical tasks can be shaped to being sufficiently undemanding, then they may be processed redundantly, alleviating a lot of the problems. And believe me - gaming is an acceptably lossy process relative to scientific computing.

I like the idea that a local dynamic network may be able to deliver better minimum latency than a 'global' centralised platform, just with a wider latency 'distribution' but that if we can prioritise tasks sufficiently (ala modern video transport streams - where more important low frequency data gets higher redundancy and latency priorty than less observable high frequency data) then the distribution of tasks can be shaped to match the distribution of node reliability.

@ Alex - I don't believe you'd need entire instances of a game running on any given machine - just portions, which would both alleviate local memory and increase obfuscation of the whole game code. Moreover one node can run many instances of the same bit of code and serve it out to many users - the potential for power saving in redundant processing then might actually become significant and overall electricity consumption might actually go down rather than up.

Still, I guess that's a long way off and too complex for developers to invest in without an existing network of critical mass.

Eric Schwarz
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I also have to wonder if OnLive underestimated the emotional attachment gamers have to both existing brands and their hardware. Players who are into traditional gaming experiences don't just like the games, they like, well, the experience - and OnLive cannot compete with that experience, especially at the prices they offered. Pound-for-pound OnLive really wasn't that much cheaper than just buying a console, and even though it was more flexible, the inferior service quality was hard to swallow.

People won't give up something they know, love and trust simply because something new comes along - it has to be appreciably, undeniably better in just about every way. While there might be a market that does see value in OnLive (highly mobile people, for instance), I certainly don't think it's large enough to sustain the otherwise massive expenses of both licensing games, marketing them, and running servers globally to support them.

Ruthaniel van-den-Naar
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Prices per title are stupid, same as in retail, but prices per bundle are very ok, in only one avaible bundle for 9.99 per month is lots of good games.

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Tom Baird
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If you start accusing companies that are actively using their current patents of patent trolling, you just render the term useless when talking about companies that are Non-practicing entities and are fully funded through legal bullying (where the term actually applies).

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Michael Rooney
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That's not why it failed. It failed because for many users it offered a sub-standard experience. Lots of successful companies use rental/subscription business models. Why do you think netflix is losing anything? Netflix is great. Amazon prime is great. Hulu is great.

The only reason I don't use OnLive is because there is input lag, but it wasn't very significant given how terrible the quality of internet is in Nova Scotia and a lot of games wouldn't have the same issue.

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