The OnLive saga has taken a steep turn in an unforeseen direction. The company isn't shutting down but is being taken over by a new private equity firm as a means of getting out of their heavy debt. In the process, however, all the OnLive employees have been laid off save for a few key figures and most won't be getting their jobs back under the new leadership. The company filed for "Assignment for the Benefit of Creditors," or ABC, which is a form of bankruptcy in California.

According to Tech Crunch OnLive sent out word about what the new structuring will be like under the equity firm, saying...
The new company is hiring a large percentage of OnLive, Inc.’s staff across all departments and plans to continue to hire substantially more people, including additional OnLive employees. All previously announced products and services, including those in the works, will continue and there is no expected interruption of any OnLive services.

We apologize that we were unable to comment on this transaction until it completed, and were limited to reporting on news related to OnLive’s businesses. Now that the transaction is complete, we are able to make this statement.

Call me crazy but that press statement seems to contradict what OnLive's CEO Steve Perlman mentioned in a meeting to staff regarding their job loss and the restructuring of the company. According to Joystiq, he explicitly stated that...
"The people that are gonna be coming on board here, that will come out of the group ... I'm gonna tell you, most of the people will not be coming on board."

Now either Perlman was just being a prick in the meeting or he was being honest. If it was the former then it makes the original press statement to Tech Crunch true, if it's the latter than it means that the press statement is a blatant lie. I'd like to think that the press statement to Tech Crunch is a lie, especially given the comments made by some of the former employees of OnLive in the comment section at the bottom of the article. I think Perlman is right; a lot of them won't be getting their jobs back.

It's a tough thing to happen but in some regards I completely understand it. Let's be real, OnLive was based here in North America but everyone knows North America has the worst internet connection rates when it comes to consistent latency at an affordable price. You have to pay an arm and a leg just to get a basic 300kbps, while a lot of developing countries get free internet at the sometimes blinding speeds of 1mbps. In simple terms, America's internet is too slow for cloud-based gaming, which relies entirely on latency and consistent streaming.

The other problem are the data caps in North America. How on Earth are you going to game for several hours a day, every other day when you're zapping up maybe several gigabytes an hour with a 250gb data cap? You'll hit your cap in no time and then end up paying extra, or you'll simply find yourself monitoring what you play via the Cloud. In simple terms, Cloud gaming is ready but not America's internet services.

Even under new leadership it's hard to imagine OnLive could maintain any additional success when a lot of gamers either don't have the appropriate speeds to make OnLive a viable alternative or those that do have to constantly watch their data transfer rates to ensure they're not capping early in the month.

I have no idea how the new firm will address some of these issues, especially an important one regarding server infrastructure, where Perlman stated that...
"There's no way to exactly estimate how many servers we'd need. So we literally bought thousands of them, and all the equipment and networks to go with it,"

"If you've got 8,000 servers and 1,600 users, how could we ever get to cash flow positive, right?"

Supposedly the new group will utilize business savvy tactics to get to the “cash flow positive” territory but again, no details on how that's going to be accomplished.

I believe Cloud gaming could be a decent alternative for the future, but right now it just kind of feels like consumers (in America) just don't have the proper ISP support to make Cloud-based gaming a profitable venture at this time.

OnLive's services will continue to operate unhindered, and I'm sure there will be additional news and information regarding the business restructuring next week.

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