Daily Digest: What went wrong with OnLive?

Cloud gaming firm OnLive has died and OnLive has risen again, though that's as far as it goes in terms of divine analogies. The transition has been brutal. OnLive effectively entered an alternative form of bankruptcy on Friday and sold all its tech and assets to a newly formed company that also carries the name OnLive.

At face value there's not much to it; but on the inside the company has been thrown into disarray. OnLive 'version one' has been emptied of its entire workforce, amounting to more than 150 staff, and with it their shares in the company have been wiped out.

OnLive 'version two', backed by VC firm Lauder Partners, is hoping to hire about fifty per cent of its old workforce. But reading just some of the comments left by workers cast aside, it's not clear how many will want to come back.

OnLive said it generated good business in a climate of severe cynicism. But the likelihood is that it was not making a profit by the time the company buckled under its own financial pressure.

So where did it all go wrong? Here's five reasons why OnLive's business lagged and eventually froze out.


1. OnLive wanted to be a rival

It shouldn't go unnoticed that OnLive's struggles are in striking contrast to its rival Gaikai, which was recently bought by Sony in a deal worth $380 million.

Gaikai always pitched itself as a tool for the publishing industry - a platform agnostic cloud gaming service that allowed anyone to publish their demos anywhere.

OnLive went a different route. It told the world that consoles were no longer needed, that people could plug an OnLive console into their TVs and scrap the other systems altogether.

It meant that OnLive was shaping itself as something that should be compared with PS3 and Xbox 360 - obviously not providing the most flattering portrait considering the installed base and huge libraries of the competition. But it also meant that exclusive Sony and Microsoft content, from Halo to Uncharted, would never arrive on the platform.

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