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Onlive 'seeking bankruptcy alternative' as layoffs strike [updated]

Update: Entire staff laid off, report citing 'affected employee' claims

Reports have emerged that cloud gaming firm OnLive has laid off all its staff and "will no longer exist" by the end of today.

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InXile Entertainment CEO Brian Fargo said on Twitter that he received the news via an email from an OnLive employee.

The email read, "I wanted to send a note that by the end of the day today, OnLive as an entity will no longer exist. Unfortunately, my job and everyone else's was included."

It went on to say, "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."

Fargo notes that a request to recall the email arrived minutes after the mail itself.

OnLive's director of corporate communications Brian Jaquet has responded to questioning over the firm's reported closure, saying, "We don't respond to rumors, but of course not."

Jaquet has also told Mashable, "no comment on the news other than to say, the OnLive service is not shutting down". Jaquet refers specifically to the OnLive service however, and doesn't confirm or deny the layoffs.

Kotaku, citing a "source inside OnLive", reports that OnLive CEO Steve Perlman told staff in a meeting this morning that the firm is filing for an 'Assignment for the Benefit of Creditors' (ABC), an alternative to bankruptcy that 'affords financially troubled companies a level of protection from creditors'.

According to the source, the OnLive service will "probably" continue, but "the company as it stands now would cease to exist" and "no one would be employed by OnLive".

"A subset of employees would be brought on to the company created from the remains of OnLive," Kotaku was told.

CVG has reached out to OnLive for clarity.

Update:IDG News correspondent Martyn Williams, who's perched outside the OnLive building just north of San Jose, California, reports having seen three people leave the building carrying 'leaving boxes' in the past few minutes (as of around 2pm (PDT), Friday August 17).

Update 2: Gamasutra claims it has 'confirmation' that Onlive has "laid off its entire staff", citing an affected employee.

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