OnLive shake-up continues

The struggling cloud gaming service has undergone a number of highly publicised changes throughout the past month, however, it seems they’re not quite over yet.

Whilst it was initially reported that OnLive founder Steve Perlman would remain the company’s CEO, it has now been announced that he will be leaving his post as both CEO and president and moving on from the firm in order to "work on other projects".

In his departure, new investor Gary Lauder is set to take the reigns as the company’s chairman, whilst Charlie Jablonski – former head of OnLive operations – has been appointed as the services COO and acting CEO.

“Steve has created an extraordinary company that no one else could have created. He is a unique entrepreneur and deserves his legendary status in Silicon Valley as a creator of groundbreaking companies,” said Chairmam Gary Lauder.

DOWNFALL

It was first reported two weeks ago that Onlive’s struggles had culminated in its demise as reports began to surface regarding the service’s imminent closure and the termination of the company’s entire staff.

After a whirlwind of conflicting rumours reports, the dust began to settle and it was announced that an existing investor, Lauder Partners, would become the new owner of OnLive as all of its assets were sold to the new company.

Following the announcement, a statement from the company read: “OnLive Inc’s board of directors, faced with difficult financial decisions for OnLive, determined that the best course of action was a restructuring under an ‘Assignment for the Benefit of Creditors’."

In a further blow to OnLive and its staff, this process meant that neither employees or their shares within the organisation could transfer to the new company. However, there was some hope as around half of the service’s staff were offered employment by the new company at their previous salary, whilst the remaining employees were simply referred to as "non-hired staff".

Most analysts have pointed the finger at the services high running costs as the reason for its demise, which are believed to be around $5 million per month. This, paired with the relative ambiguity surrounding the number of active OnLive subscribers and income would certainly fall in line with the company’s reported $30-40 million debate at the time of its initial closure.

The company’s former CEO believes dwindling subscriber numbers to be the root of OnLive’s problems. Perlman reportedly told staff that a major contributing factor in the service’s failure to make a profit was its contacted use of 8,000 computer servers, whilst only 1,600 people were using the service at any one time.

It is not just OnLive employees reeling from the company’s shake-up, as affiliates of the service such as BT and HTC announced that they would likely have to write-off their investments within the company.

Whilst the British telecoms group declined to value its stake within the company, simply stating it did "not represent a significant investment for BT as a whole", HTC has said it expects to recognise a £25m loss for its 3.8 per cent stake, which it took on in 2011. Other firms losing out on their investment in the service include Warner Bros and US telecoms provider AT&T.

WHAT IS CLOUD GAMING?

OnLive was the pioneer of ‘on demand’ and cloud gaming services, which allowed users to play the latest games releases on any device, regardless of its specs, via the internet.

Users were able to access the service through a number of devices including PCs, laptops and eventually smartphones and tablets.

Remote servers would run the actual game and players would have the sound and video streamed to their device, whilst their input would be streamed to the server in order to control the game.

The only requirement of the service was its need for high-speed broadband internet and its bandwidth-intensive usage, which ultimately led to criticism within the UK as the country’s broadband infrastructure was simply not ready for a service of its kind, resulting in lacklustre performance and a disappointing experience overall.

Sony recently announced its acquisition of rival on-demand service Gaikai, which it plans to use to stream its wide range of services and content to its users. If OnLive has suffered widespread issues as an innovator in the area, it is hard to imagine it will enjoy much more success as it begins to compete with Sony and other on-demand gaming services, which are likely to appear over the coming years.

BRIGHT FUTURE

Whilst all of this internal change continues to progress, OnLive has promised its users that they will experience no disruption as the service continues to operate uninterrupted.

Lauder is optimistic for OnLive’s future, stating: "The new OnLive is emerging with greater financial security and a brighter outlook on the future. OnLive is now positioned to execute against longer-term projects with our breakthrough technology, products and services."

However, whilst much of the behind-the-scenes information surrounding the service remains in the dark, it is hard to predict the future for OnLive as it remains on shaky ground. Even with this significant investment, if the issue highlighted earlier aren’t addressed, it is difficult to share the bright outlook that Lauder envisions for the company.

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