OnLive sells assets to OnLive, leaves HTC and other investors out to dry

Cloud service company OnLive sold off assets to a venture capitalist and started a new company also called OnLive, but shares were not part of the sale so investors and shareholders are out the money invested in the company.

There was quite a bit of drama played out on Friday as news spread quickly that OnLive had fired everyone and was shutting down. The company issued a fuzzy statement that the only comment was the "OnLive services is not shutting down." I was holding off posting something since I don't trust a single Twitter post or email that could have come from a disgruntled employee. However, as you can read in depth on The Verge, OnLive did lay off everyone and then offered jobs to many of them under the new OnLive company funded by a single investor as a result of an Assignment for the Benefit of Creditors. The major problem is that investors, such as HTC, and company shareholders get nothing from this restructuring move.

As David Meyer wrote on ZDNet earlier today , HTC invested $40 million in OnLive in hopes of having a stake in cloud gaming and supported the service on their HTC Flyer and other Android phones. They now have to book a loss for this investment, which is not good news when you also look at other recent financial woes .

I tried to use the OnLive gaming service on my HTC Flyer, iPad, and Android phones, but it was a frustrating experience that couldn't be matched by console gaming or even gaming directly on my tablets and phones. I could not see any value in this gaming solution and never subscribed. OnLive stated that the service never shut down and remains active for subscribers and we will have to see if subscribers have enough confidence in the new OnLive to stick around.

OnLive also has the OnLive Desktop service that provides a full Office experience for the iPad yet they ran into some licensing issues with Microsoft. They were able to modify their service to work with Office and it is a nice solution as long as you have a connection.

We don't yet know what forced this restructuring at OnLive (costs, mismanagement, lack of subscribers), but it leaves a bad taste in my mouth to see the company close and then reopen with the same name and service after shutting out investors and shareholders.

Related ZDNet coverage


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