OnLive reportedly hit with mass layoffs, possibly filing for bankruptcy (updated)

The Verge reports that OnLive - the cloud gaming startup has laid off its entire staff and maybe shutting down, according to veteran video game developer Brian Fargo.

Fargo received an email from an OnLive employee who told him that by the end of the day "OnLive as an entity will no longer exist".

 The Verge reports:

 Cloud-gaming company OnLive is rumored to have been hit with layoffs today, according to veteran video game developer Brian Fargo, who says he's received communication from a former employee warning of the company's demise.

According to an email forwarded to Polygon from an anonymous, supposedly former OnLive staffer, the company will "no longer exist" as of today.

"I wanted to send a note that by the end of the day today, OnLive as an entity will no longer exist," reads an email forwarded to Polygon and later tweeted by Fargo. "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."


According to a report on Mashable, layoffs have affected the entire staff. A separate report on Game Front says "the whole company, (minus some key upper management, details still not known), has been let go."

The company's official Twitter account is currently still tweeting, with no indication that there are troubles at the company.

"We don't respond to rumors and have no comment," said an OnLive representative when asked for clarification. A statement from Brian Jaquet, OnLive's director of corporate communications, refutes allegations that the company is folding, saying "We don't respond to rumors, but of course not."

"I have no comment on the news other than to say the OnLive service is not shutting down," Jaquet told Polygon when asked specifically about layoffs. "I'm sorry I cannot be more specific." In a separate statement, Jaquet emphasized to Forbes "We are not going out of business."

OnLive was first unveiled in early 2009, promising cloud-streaming of video games to consoles and PCs that offered gameplay independent of hardware capability. The company announced a partnership with open source console Ouya in July to bring its cloud-based gaming service to the platform.

Update: According to a report on Kotaku, OnLive is planning to file for bankruptcy. OnLive CEO Steve Perlman reportedly told employees "the company as it stands now would cease to exist and that no one would be employed by OnLive."

A report from TechCrunch also suggests that layoffs are the company's way of "cleaning house" in preparation for a buyout. A source says that the buyer wanted to own the company and its services without worrying about potential liability, patents, and equity. Engadget partially corroborates the story, saying some employees who avoided being laid off received new offer letters from another company.