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Trouble At OnLive 142

Posted by Soulskill
from the not-exactly-blue-skies-in-the-cloud dept.
Lashat writes "News of trouble at cloud gaming provider OnLive is trickling out of various sources. According to Forbes, all employees received their walking papers today. Rumors of a shutdown, buyout, or re-formation as a new company are plentiful, but the company hasn't announced anything yet. The article quotes an email sent to InXile CEO Brain Fargo from an employee within the company: '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. 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. It has been an absolute pleasure working with you and I'm sure our path with cross again.' OnLive's Director of Corporate Communications told Forbes, 'No, let me be clear. We are not going out of business.'" While the question of whether OnLive-as-an-entity will continue is still up in the air, an internal source confirmed to Gamasutra that OnLive's entire staff has been laid off, and OnLive employees were seen outside headquarters with 'moving boxes.' Kotaku says the company has filed for protection against creditors in California (not bankruptcy, but similar).
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Trouble At OnLive

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  • by CanHasDIY (1672858) on Friday August 17, 2012 @06:14PM (#41030717) Homepage Journal
    More like "Business going out.. of country"

    Yea, I'm accusing them of ditching the American staff that grew the company into what it is today, so they can outsource the jobs to the 3rd World.
    Here's hoping they prove me wrong.
    • by gl4ss (559668)

      if they were just moving the things elsewhere, that would have been done in a different fashion.

      they're out of money, out of liquidity - so instead of leaving employees hanging and telling them to come in without knowing if they'll be paid they showed them the door.

      • If that's the case, then that's what they SHOULD be doing. It's illegal for a company to operate when insolvent. The directors could go to jail for that.
      • if they were just moving the things elsewhere, that would have been done in a different fashion.

        they're out of money, out of liquidity - so instead of leaving employees hanging and telling them to come in without knowing if they'll be paid they showed them the door.

        I'd be an asshat for it, but it's pretty easy to deprive people of stock options the same way that the PGE/Enron thing played out with no discernible profit to the operating company that was left after the dust settled from which to reclaim damages. "Sorry guys, we are victims too!". I was pretty screwed that way once, but that was once too many.

        You derez the current company to zero your debts then rerez as a new company that buys the old company's assets at fire sale prices to claim a tax loss on the old

    • by Lashat (1041424)

      That would be really pathetic if they did that. I would rather see them bankrupt. Sorry, to those who have purchased games from the service.

    • by medv4380 (1604309)
      Oh, and here I thought it was going bankrupt so that they can use their Cloud Gaming patents to become another SCO
    • by wiegeabo (2575169)

      If they're doing that, so what?

      Sounds like the company was about ready to go out of business anyway. So those jobs were gone no matter what.

      If moving to another country keeps them in business, then so be it.

      • by Lashat (1041424)

        It's just a major F.U. to the employee ranks and most of the management who had been working there until today.

        • Re: (Score:3, Insightful)

          by wiegeabo (2575169)

          So it's better they just fire everyone and go out of business?

          That makes no sense.

          • by Lashat (1041424)

            Read this comment further down the thread. http://games.slashdot.org/comments.pl?sid=3056285&cid=41032105 [slashdot.org]

            It doesn't seem to be a choice between stay in business or fire everyone. Since the news broke on Friday OnLive has released statements in which they claim about 50% of the old employees will be hired by the "new" company. I believe, as speculated in the comment link above, that this was done to reduce the company's liability in order to make a better sale.

    • by AmberBlackCat (829689) on Friday August 17, 2012 @08:22PM (#41031799)
      I figured they're just filing bankruptcy and reopening under another name so they can erase any money owed and keep moving along.
    • by Nrrqshrr (1879148)
      But if they move to some random on-the-other-side-of-the-world country, wouldn't that affect their latency and lag performance? And if I remember correctly, latency was the first question everyone had in mind when they started the service.
    • by PostPhil (739179)
      The Latin phrase "per se" means "in itself" or "through itself". It's not "persay". Also, don't use it when you actually mean to say "exactly". "Per se" is used when you want to say that something is intrinsically true about an object. If you mean to say that something "isn't exactly true", then simply say that instead.
  • It's true (Score:5, Informative)

    by Caerdwyn (829058) on Friday August 17, 2012 @06:22PM (#41030813) Journal

    Ex-Onlive employee here (I left a couple of years ago). I've been hearing from my OnLive friends... yup. Big big layoff. Hire these people if you see 'em, folks, they're good workers who know their stuff and have a work ethic.

    The tech works, and has been fine for almost three years now; I was doing all my gaming through OnLive when I worked there, and was about 50 miles form the data center. The trouble as I see it is the same that I saw back when I left: it ceased being a technology play when it worked well enough, and turned into a business development play. They needed to:

    • sign the majority of the major publishers
    • get them to release new titles simultaneously with physical retail
    • convince the publishers to charge somewhat less than physical retail and
    • form revenue-sharing-based transit agreements and peering deals with major ISPs to keep OnLive traffic out of the bandwidth caps

    Unfortunately, none of the biz dev plays were driven to success.

    Tech is easy. Business is hard. CUtting deals is hardest of all.

    • by Sycraft-fu (314770) on Friday August 17, 2012 @06:48PM (#41031095)

      They can crow all they like about tech, the fact of the matter is that latency, which will be interface latency with remote video rendering, and quality will always be problems. Onlive promised to offer "maximum quality" on any device. The idea that instead of a $2k gaming rig you could get that on a cheapie computer. Ok well that might have been cool. However instead you got a 1280x720 4:2:0 video stream that was heavily compressed. That meant low rez and a loss of fine detail. Hence really you were getting the kind of thing that a low end video card or even integrated video can offer, and of course those don't have latency and downtime issues.

      When the day comes that everyone has high end internet connections, maybe it is more feasible. However when you are trying to compress to a 1 mbps stream, quality won't be so impressive compared to cheap systems and that makes it a hard sell.

      • by Caerdwyn (829058) on Friday August 17, 2012 @07:29PM (#41031403) Journal

        Where do I begin...

        With OnLive, you could play Crysis at 30fps on medium settings at 720p on a Celeron-equipped netbook with an Intel GMA950. So no, you were not getting the kind of thing integrated video can offer.

        Latency depends entirely upon the quality of the network link between you and the data center. OnLive was not intended for people in Yellowknife or Cheyenne or the Azores; it was for people in densely-populated well-wired urban areas in which they had data centers. That's a lot of people, but no, it's not everyone, nor is there any sort of requirement that it be for everyone. Part of the setup was a latency/bandwidth test that you were supposed to run before you signed up. And if your ISP oversubscribed your last-mile connection to the point where you couldn't use it between 7pm and 10pm... yeah, that's a problem, but it's not universal, and it's not anything OnLive could do anything about, any more than Ford is responsible for whether on not your street has potholes. I suggest beating your ISP over the head with a lead pipe in such cases.

        Yes, there's a loss of single-pixel detail. It's not perfect, and there is no requirement that it be so (any more that there is a requirement that lossy audio be forbidden for sale). Expectations must be reasonable (as must expectation-setting).

        OnLive's video was tuned for 4 to 6 mbps with less than 30ms of latency, with low packet loss (less than 1%). Under such circumstances, it did well. When network conditions deteriorated, it had some automatic fallbacks to keep the framerate above 30fps for as long as possible; it would remain at least usable down to 2.5mbps/5% loss, though it wasn't pretty under those conditions. It was far, far more than glorified RDP and VNC (it wasn't a video memory buffer; the hardware captured and processed the digital video stream from a DVI interface and the digital audio stream as taken from SPDIF outputs, and injected control with a virtual USB HID). It was good tech. Low latency was achieved by essentially running unbuffered and a couple of other things that I'm not sure whether I could talk about yet.

        But as I mentioned earlier, the real failure was the inability to make the deals with third parties that would turn that tech into something worth paying for.

        • by locopuyo (1433631)
          But the image quality is still bad because it is compressed.
          I don't know about you but I can't stand playing a game with input lag. Those old LCDs with 16 ms response time make games unplayable for me. OnLive's latency is much worse than that.
          If you're playing some casual facebook game you probably don't care about input latency, but playing any serious game with fancy graphics having a latency like that is a deal breaker for most people. Especially for multiplayer games.
          But if you want to play agains
        • by Swistak (899225)
          When I was reading this post I remembered a joke from Big Bang Theory, something along the lines of "I have perfect solution but It only works for square chickens in the vacum". If you are one of these "people in densely-populated well-wired urban areas in which they had data centers. " You usually also have awesome gaming rig, or at least playable one. 1% of population that could actually use you product, didn't really need it. Those who would like to use it - couldnt, and you're suprised you've failed?
          • by Anonymous Coward

            For calling decades old scientist's joke [wikipedia.org] "a joke from Big Bang Theory", you must immediately a) hand in your geek badge, and b) give up your 6 digit UID.

            Failure to comply will be met with begrudging acceptance with prejudice.

          • by Rogerborg (306625)
            Spherical chickens in a vacuum. Take the nerd card out of your wallet and hand it in at the front desk.
        • by Anonymous Coward
          What onlive gives you can't fairly be called 720p, it is compressed all to hell. No gamer would find what they deliver an acceptable replacement for what even low end graphics cards deliver for 720p.
        • by drinkypoo (153816)

          The basic fundamental problem is that ISPs do oversell their connections as SOP and people want to play games at prime time and therefore the product is useless to the majority of even the intended customers, let alone the customers further out into the boondocks. You may have had good results 50 miles from the server but that's not really much of an endorsement.

          Great that users with pathetic computers can play games if they happen to have an ideal network connection, but that's just not that huge a market.

      • by Osgeld (1900440)

        "When the day comes that everyone has high end internet connections, maybe it is more feasible."

        yea, we said the same thing back in dialup days, guess what happened? The games got more complex, and the internet doesn't improve nearly as quick

    • by ledow (319597)

      And tech (as in physical hardware) doesn't exist without a viable business behind it.

      The problem is quite simple - you have to buy computers capable of running the game, buy the game, buy the techs to support that all, buy the datacenter space and bandwidth to keep up, buy other things to capture the image and compress the streams, etc. and then sell it to the user for less than the cost of the game itself.

      It doesn't work. And, that aside, it was nothing more than video-streaming of a moving image, somethi

  • Good riddance (Score:4, Insightful)

    by WaffleMonster (969671) on Friday August 17, 2012 @06:35PM (#41030951)

    I never understood the appeal given many games must really suck to play with all the control latency and video buffering.

    How much more can a used xbox/titles really cost over time vs subscription cost of onlive service?

    No secret I've always had a negative opinion mostly due to the egregious waste of bandwidth and resources but also for failing to see the market value.

    My bet at the time they would be done in three months and they lasted quite a bit longer so excellent job on execution.

    • by firex726 (1188453)

      While never using it myself, the reviews I saw did not make it seem that bad.

      Maybe for twitch-tastic fighting games, you'd have an issue but you could easily play any RPG, FPS, or similar game without issue.

    • Re:Good riddance (Score:4, Insightful)

      by Onymous Coward (97719) on Saturday August 18, 2012 @02:35AM (#41033981) Homepage

      Jesus H. Christ, people! What's so insightful about "I don't get it because I imagine it would suck" when there's a freakin' free trial available?

      Go play the free games and decide for yourself just how good the technology is.

      It's not hard and then you can stop talking out your ass.

  • by Hentes (2461350) on Friday August 17, 2012 @06:37PM (#41030985)

    We still don't want computing to be a rentable service.

    • by fm6 (162816)

      What, you're under the impression that OnLive is a typical public cloud service? They rent virtual desktops, and there doesn't seem to be much demand for that.

      More typical are services like Windows Azure and AWS, which concentrate on backend services. Those are very healthy indeed.

    • Millions of World of Warcraft players disagree with you, and EverQuest players before them.
      • Re: (Score:3, Informative)

        by scot4875 (542869)

        GP said computing, not gaming. WoW and EQ players don't rent the computers that run their game clients.

        --Jeremy

        • GP said computing, not gaming.

          The article is about OnLive. OnLive began as a gaming service, and the content of the front page of www.onlive.com still mentions games, not OnLive Desktop.

          WoW and EQ players don't rent the computers that run their game clients.

          They do rent the computers that run their game servers. This raises the philosophical question of where the game actually is.

          • by gl4ss (559668)

            GP said computing, not gaming.

            The article is about OnLive. OnLive began as a gaming service, and the content of the front page of www.onlive.com still mentions games, not OnLive Desktop.

            WoW and EQ players don't rent the computers that run their game clients.

            They do rent the computers that run their game servers. This raises the philosophical question of where the game actually is.

            quite frankly onlive should have streamed the opengl stream and not video, but that would have made the client end a lot more complex and the whole thing a lot more complex operation.

            ironically the only type of games their thing would be great would be for mmorpg's which would be able to scale interaction to a whole new level with every players game instances being run in the same data center.

  • Are we starting to see reality run into the cloud hype, or is this just ordinary everyday business failure?

  • by Anonymous Coward

    My money is that Valve or someone with real business ability will absorb the tech and re-bundle it in new ways to serve advertisements on a premium paid service.

  • by QuasiSteve (2042606) on Friday August 17, 2012 @06:55PM (#41031179)

    Seems a shame for the Ouya platform if their 'deal' with Onlive isn't kept alive after the restructuring/relaunching/whatever they're doing over there.

    Ouya simply doesn't have the hardware to run e.g. battlefield. However, it has the hardware just fine to run an Onlive client, meaning even the 'hard core' gamers (if they can deal with the bit of latency) could get their fill.

    It's unfortunate that it appears not enough publishers were willing to go with Onlive - although I suspect that's a combination of income from game sales themselves and pressure from certain hardware companies that like seeing their logo slapped on triple-A titles.

    Hopefully they can reorganize, rethink their business strategy, and get to a successful formula.

    On the other hand.. outside of the Ouya.. take a budget graphics card, drop it into a computer from 2 years ago, and you'll still be gaming along with the guy next door with a $4k setup - just slightly less flashy. Add to that data use limits likely to make their comeback (many ISPs in the U.S. already do, iirc), and perhaps it's just not as attractive as it was when they first launched.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      even the 'hard core' gamers (if they can deal with the bit of latency) could get their fill.

      No "hardcore" gamer is going to accept heavily compressed and blurry chroma subsampled video streams. Even a low quality video card gives better quality output.

  • This won't be the case if the people at the top had learned the proper use of leadership. So many companies promise so much, but forget on how to do business in the first place. You can make great things, but do not know how to sell it and cater to the market - then no one would ever care. Only if the CEO read Robin Sharma's leadership book, and Ranak Jones's Rogue's Guide to Acquisition book on how to sell. Oh well, You had a short live OnLive. RIP
  • So what does this mean for similar companies like Gaikai, that appear to have more mainstream titles and higher quality? Opportunity, or impending doom?
  • by Graemee (524726) on Friday August 17, 2012 @08:58PM (#41032105)
    It been reported that this move to fire the staff was just a way to remove the employee equity in the company, thus making the owners more of a share of the sale price. Steve Perlman may be a giant Scrooge. http://techcrunch.com/2012/08/17/source-onlive-found-a-buyer-cleaned-house-to-reduce-liability-prior-to-acquisition/ [techcrunch.com]
    • by Joe_Dragon (2206452) on Friday August 17, 2012 @09:03PM (#41032143)

      that is why we need unions in TECH so employee don't get f* over.

      • Re: (Score:2, Insightful)

        by Anonymous Coward
        Right, so that the investors get screwed instead. Why would someone invest in a company (say, GM) when the company's just going to be handed over to a labor union, stripping the stock from the people who invested and allowed it to exist in the first place?
        • by JDG1980 (2438906)

          In the case of a startup with stock options, the employees ARE investors.

        • by gl4ss (559668)

          Right, so that the investors get screwed instead. Why would someone invest in a company (say, GM) when the company's just going to be handed over to a labor union, stripping the stock from the people who invested and allowed it to exist in the first place?

          investors such as creditors, employees working for equity etc _are_ getting fucked. probably some guys who gave them just cash are getting fucked by this too. it just favors whoever had the controlling interest on it.

    • Mod parent up. That appears to be exactly what happened.

      Expect employee lawsuits over this.

    • by JDG1980 (2438906)

      It seems to me that the key factor here will be whether this was a true arm's-length transaction or not. Were the OnLive assets sold at a fair market price because the company in its existing form just wasn't profitable? In that case, the equity probably was worthless, and it was reasonable to try to salvage something from the wreckage. Or were the assets sold at a knock-down price to a company controlled by the existing management, or people closely associated with management? If that's the case, then the

  • "I wanted to send a note that...." should be followed by something like "...the refrigerators will be cleaned over the weekend", not "...you're all fired."

  • I wanted to send a note that by the end of the day today, OnLive as an entity will no longer exist.

    but corporations are people too! if you cause them to stop existing then that is MURDER!

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