It has been revealed today OnLive owed creditors $30-40 million, before its insolvency late last week.
OnLive managed to survive by entering an “assignment for the benefit of creditors”, transferring its assets to the Insolvency Services Group.
Joel Weinberg, CEO of Insolvency Services Group.
It was a company that was in dire straits. It only had days to live in terms of cash flow and the like. Something had to be done immediately or there would have been a hard shutdown, which would have been a disaster.
On Friday 17th a venture capital firm owned by Gary Luader formed a new company by the same name, OnLive, and purchased the operating assets from ISG. This means the end user, in this case the gamers, can continue to use the service without any noticeable changes.
The news however is less positive for the creditors, with Weinberg estimating they’ll receive no more than 10 cents on each dollar owed.
Source: Silicon Valley Mercury News
bmg_123
Explains why Sony bought Gakai, it seems.
skibadee
I heard it costs 5 million a month to run.
mister_headshots
When I read figures like that, I wonder how it can be a viable business venture….
Peter Chapman
I feel kinda guilty that they gave me a free microconsole and then sent me an extra free controller. I did have a subscription for almost a year though but cancelled it about three weeks before they filed :(
shields_t
I read a good guardian online article about their downfall and they alluded to the freebie consoles – I didn’t go anywhere near their eurogamer stand, given the size of the queue. But a company like this was always going to live and die by its catalogue of software and frankly that was always pretty mediocre.
Dom El
I absolutely agree – my free console and numerous free games can’t have helped a service I did actually use. Whether I would have even tried it out otherwise though is the key question. I still stand by the ideas and technology behind it but as Shields_t says it was the catalogue of software that was its ultimate failing – I stopped my playpass subscription when nothing of any value appeared for it.
The Lone Steven
Bloody hell! I knew that an online streaming only game service would end up in debt due to the nature of streaming games and people not having a decent connection to do so but 30million. It seems like they need to take a look at themselves and avoid getting into debt again with the new company.
TSBonyman
8000 servers and 1600 concurrent users – It’ll be interesting to see how the new company plans to turn things around.
ico
Makes me think about 3d tv. It’s just not going to take off any time soon. 3d tv is a novelty that won’t go anywhere fast and cloud based gaming in isolation (i.e. not backed up by a console that serves the physical media too) is just too costly, trying to break into markets without the broadband capability and too niche (at present anyway) in my opinion. And with that I’m out.
McProley
Its like Dragon’s Den in here
Amphlett
Listen ‘On Live’, your business plan sounds like a child wrote it, you clearly don’t understand Profit and Loss, you clearly don’t understand your target market and you want me to invest my childrens’ in inheritance in your failing business? For those reasons, I’m also out.
xdarkmagician
I wish I only had to pay 10% of my debt. This right here is what’s wrong with the world. They tried something new and failed spectacularly, but instead of closing they get to restructure their debt and fail again.
Movie and TV streaming is just starting to become popular, but its still only marginally profitable at best. At a whole the costs of streaming produce an incredibly narrow profit margin. Onlive is better suited as a service tied into another company with an already established user base. This is one example of when the gaming industry should have taken a cue from Hollywood, if Hollywood hasn’t figured out how to consistently make money from streaming it can’t be done yet.
If streaming video games is ever going to be profitable, it has to be done by the publishes themselves. That way they don’t pay licensing fees. Until ActiV or EA start their own streaming service, video game streaming is only going to pay 10% of the bills.
PA_Kid
Yeah, let’s be honest the game at the top for corporations is rigged and this really benefits no one more than the guy that started OnLive and certainly not the creditors. If their patent portfolio is as good as they claim the I bet that the creditors would have been better served by selling the patents on the open market and possibly passing all OnLive users to Gaikai for pennies on the dollar and selling off all the other assets.
But let’s be honest this is a way to shed debt and keep running and basically say F You to all your creditors. Wish I could legally change my name, default on 90% of my debt, sell my assets to my new legal name and go about life with no penalties to my credit rating.
Heard someone make a joke recently that I really think some up how screwed up corporations are – “I’ll believe corporations should be treated like people as soon as Texas executes one.”
:p
Bilbo_bobbins
in the Uk, you can grant yourself legally broke. The problem is you have a big black stain on your record and will find it hard to find any credit for years to come. A friend of mine owed £40k on credit cards, declared himself broke, didn’t have to pay it back and now can’t get any credit at all.
Thats the price you pay. In the world of business, this happens all the time. Its just easier to change your business name and start again.
Awayze
Cloud gaming sucks! It’s just stupid if you want to stream the latest games. PS2 or PS1 on PS4 with Gaikai I can understand but streaming PS3 games will be a epic fail.
hazelam
incidentally, Onlive are giving away four indie games this weekend.
http://www.facebook.com/OnLive
one of them is the highly regarded Dear Esther.