Many sites are reporting the immediate shutdown of streaming game pioneer OnLive, claiming the company has fired all of its employees and intends to file for bankruptcy.

Rumor Has It

It looks like the start of this rumor is a Tweet from Brian Fargo, which claimed he had received the following email from an OnLive employee:

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.

According to this unnamed source within OnLive, after all of the employees were fired, a new company would rise from the ashes to take over management of the actual OnLive service. The line “titles that will remain on the service” would also seem to indicate that some of OnLive’s current game catalog would be lost, no doubt as a cost-cutting measure.

Official Statement

Not long after these rumors started making their rounds on the Internet, tech sites such as Mashable and Kotaku were quick to jump on the bandwagon, though it’s worth noting that most sites linked to the original Brian Fargo Tweet as their source. Not long after the story started making the rounds online, OnLive’s own director of corporate communications Brian Jaquet had this to say:

We don’t respond to rumors, but of course not.

I have no comment on the news other than to say the OnLive service is not shutting down. I’m sorry I cannot be more specific.

Brian Jaquet

It’s interesting to note that this statement doesn’t actually deny the claims made by Brian Fargo’s source. Firing all currently employees and restructuring he company would be a financial last ditch effort, and doesn’t necessarily mean the service is shutting down. It certainly doesn’t look good, however.

Significant Loss

If the rumors are true, and OnLive is in a dire situation, it would be a serious blow to the still developing market of streaming game technology. It’s hard to imagine OnLive closing its doors after the recent high level deals it had made with hardware manufacturers such as VIZIO and OUYA; and the recent Sony acquisition of OnLive’s competitor Gaikai seemed to show the industry was getting the attention of the traditional gaming market.

On a somewhat more personal note, the Linux-powered OnLive MicroConsole was one of our first hardware reviews here at The Powerbase, where we acknowledged the companies dedication to the open source community and the tangible advantages such a service had to users of alternative operating systems.