OnLive Does the Zombie - Comes Back from the Dead
One way to downsize your staff and reallocate cash
Steve Perlman
Cloud gaming's OnLive - competitor with Sony's Gakai - has gone out of business, laid of half its workforce, cancelled shares... and then come back to life again as OnLive.
On Friday OnLive made its Palo Alto staff redundant. According to a report on the Allthingd site in fact, "The departures from the online cloud-gaming service came after a meeting this morning in which its top execs told staff that it would be letting almost the entire staff go, but without a lot of explanation of what that meant.
Joystiq is more expansive, quoting CEO Steve Perlman as follows:
"I've been a non-stop fundraising machine. And I finally got to the point where I just could not bring in enough funding to carry this thing forward."
The report then states that, "The hundreds of employees that make up OnLive were – en masse – relieved of their positions in yesterday's meeting, including Perlman himself. "All of us, technically, as of today, our jobs have ended – our current jobs with this company," another administrator informed the crowd after Perlman finished speaking.
"OnLive is entering what is known in California as an "Assignment for the Benefit of Creditors," or an "ABC," (a form of bankruptcy) wherein an "assignee" (a person, persons, or entity) takes over the assets of the current company – in OnLive's case, this means "the software, hardware, network architecture, our logo, all that stuff," according to Perlman – in an effort to lighten the previous company's debts and get its creditors paid off. Thus the "Benefit of Creditors" part of that acronym."
But now what has happened, according to OnLive itself is that, "on August 17th all of its assets were acquired by a newly formed company that will continue to operate under the OnLive name.
What has actually happened is that an investor called Lauder Partners has resurrected the OnLive company under the name of "OnLive" as an affiliate. Strangely, the same Lauder Partners had already invested in the old OnLive back in 2009. So, what will happen according to AllthingDs Kara Swisher is that:
"Under the new arrangement, the start-up will still be called OnLive, operate in the same manner, but with only about half its old staff hired back to work for the Lauder 'affiliate'. Whatever that is!" (her italics).
Sensing confusion and cynicism in customers and investors, the "all new" OnLive (and we'd imagine Lauder Partners) is looking for positive spin and has released an "FAQ" that includes some answers, but certainly not all of them. It reads as follows:
"Q. Will users see any change in the OnLive Game or Desktop Services? What about their purchases?
A. Users should see no change in the OnLive Game or Desktop Services. All of their purchases remain intact and available. OnLive has been up 24/7 since launch over two years ago and expects to remain so. OnLive has over 2.5 million subscribers, with an active base of over 1.5 million subscribers, connecting from a vast range of devices and networks, with many sessions running for hours. The user base is growing rapidly with OnLive’s addition into recently announced devices and TVs from major manufacturers. We expect this growth to continue under the new company.
Q. Is there any cash or stock in the new company provided for any OnLive, Inc. shares?
A. Unfortunately not. The nature of the transaction is such that only assets, not shares, were purchased. This is true for all shares of OnLive, Inc., whether held by investors, employees or executives.
Q. Did Steve Perlman receive stock or compensation in this transaction?
A. Like all shareholders, neither Steve nor any of his companies received any stock in the new company or compensation in this transaction at all. Steve is receiving no compensation whatsoever and most execs are receiving reduced compensation to allow the company to hire as many employees as possible within the current budget.
Q. Did all OnLive, Inc. assets transfer into the new company? Are any assets held by any other party?
A. All of OnLive, Inc.’s assets (e.g. technology, patents, trademarks, etc.) were transferred to an assignee, which then sold the assets to the new company. There was no transfer to any other party.
Q. Have OnLive, Inc. employees been offered positions in the new company?
A. Almost half of OnLive’s staff were offered employment at their current salaries in the new company immediately upon the transfer, and the non-hired staff will be given offers to do consulting in return for options in the new company. Upon closing additional funding, the company plans to hire more staff, both former OnLive employees as well as new employees."
Questions unasked and answered in the FASPin include:
- How much did Lauder pay for its new stake?
- How much was made in the sale of "All of OnLive, Inc.’s assets (e.g. technology, patents, trademarks, etc.)"?
- By whom?
- Why did the crisis come to quickly and our the steering management still on board?
And this is despite Steve Perlman, who appears to be an honourable man stating, "I''m the one that brought you here. I'm the one that ultimately made decisions. And I'm the one that ultimately takes responsibility. So I am sorry, and it didn't end up exactly as we'd hoped."
We're keeping a close watch on this one.
On Friday OnLive made its Palo Alto staff redundant. According to a report on the Allthingd site in fact, "The departures from the online cloud-gaming service came after a meeting this morning in which its top execs told staff that it would be letting almost the entire staff go, but without a lot of explanation of what that meant.
Joystiq is more expansive, quoting CEO Steve Perlman as follows:
"I've been a non-stop fundraising machine. And I finally got to the point where I just could not bring in enough funding to carry this thing forward."
The report then states that, "The hundreds of employees that make up OnLive were – en masse – relieved of their positions in yesterday's meeting, including Perlman himself. "All of us, technically, as of today, our jobs have ended – our current jobs with this company," another administrator informed the crowd after Perlman finished speaking.
"OnLive is entering what is known in California as an "Assignment for the Benefit of Creditors," or an "ABC," (a form of bankruptcy) wherein an "assignee" (a person, persons, or entity) takes over the assets of the current company – in OnLive's case, this means "the software, hardware, network architecture, our logo, all that stuff," according to Perlman – in an effort to lighten the previous company's debts and get its creditors paid off. Thus the "Benefit of Creditors" part of that acronym."
But now what has happened, according to OnLive itself is that, "on August 17th all of its assets were acquired by a newly formed company that will continue to operate under the OnLive name.
What has actually happened is that an investor called Lauder Partners has resurrected the OnLive company under the name of "OnLive" as an affiliate. Strangely, the same Lauder Partners had already invested in the old OnLive back in 2009. So, what will happen according to AllthingDs Kara Swisher is that:
"Under the new arrangement, the start-up will still be called OnLive, operate in the same manner, but with only about half its old staff hired back to work for the Lauder 'affiliate'. Whatever that is!" (her italics).
Sensing confusion and cynicism in customers and investors, the "all new" OnLive (and we'd imagine Lauder Partners) is looking for positive spin and has released an "FAQ" that includes some answers, but certainly not all of them. It reads as follows:
"Q. Will users see any change in the OnLive Game or Desktop Services? What about their purchases?
A. Users should see no change in the OnLive Game or Desktop Services. All of their purchases remain intact and available. OnLive has been up 24/7 since launch over two years ago and expects to remain so. OnLive has over 2.5 million subscribers, with an active base of over 1.5 million subscribers, connecting from a vast range of devices and networks, with many sessions running for hours. The user base is growing rapidly with OnLive’s addition into recently announced devices and TVs from major manufacturers. We expect this growth to continue under the new company.
Q. Is there any cash or stock in the new company provided for any OnLive, Inc. shares?
A. Unfortunately not. The nature of the transaction is such that only assets, not shares, were purchased. This is true for all shares of OnLive, Inc., whether held by investors, employees or executives.
Q. Did Steve Perlman receive stock or compensation in this transaction?
A. Like all shareholders, neither Steve nor any of his companies received any stock in the new company or compensation in this transaction at all. Steve is receiving no compensation whatsoever and most execs are receiving reduced compensation to allow the company to hire as many employees as possible within the current budget.
Q. Did all OnLive, Inc. assets transfer into the new company? Are any assets held by any other party?
A. All of OnLive, Inc.’s assets (e.g. technology, patents, trademarks, etc.) were transferred to an assignee, which then sold the assets to the new company. There was no transfer to any other party.
Q. Have OnLive, Inc. employees been offered positions in the new company?
A. Almost half of OnLive’s staff were offered employment at their current salaries in the new company immediately upon the transfer, and the non-hired staff will be given offers to do consulting in return for options in the new company. Upon closing additional funding, the company plans to hire more staff, both former OnLive employees as well as new employees."
Questions unasked and answered in the FASPin include:
- How much did Lauder pay for its new stake?
- How much was made in the sale of "All of OnLive, Inc.’s assets (e.g. technology, patents, trademarks, etc.)"?
- By whom?
- Why did the crisis come to quickly and our the steering management still on board?
And this is despite Steve Perlman, who appears to be an honourable man stating, "I''m the one that brought you here. I'm the one that ultimately made decisions. And I'm the one that ultimately takes responsibility. So I am sorry, and it didn't end up exactly as we'd hoped."
We're keeping a close watch on this one.
Companies:
OnLive
Read More Like This