Widely spread — but still unconfirmed — reports of mass layoffs at cloud-based gaming company OnLive are reportedly tied to an acquisition of the three-year-old company by an unknown third party.
According to a report from alleged former OnLive employees, at least 50 percent of the company's staff was let go this morning, reports Engadget. Staffers were reportedly told that OnLive's new owner had already sent offer letters to remaining employees. An ex-OnLive staffer estimates that OnLive going forward could exist as a skeleton crew of a little as 20 employees.
OnLive employee profiles on LinkedIn have been dropping throughout the day, with at least 20 members updating their status as former employees of the company.
IDG News correspondent Martyn Williams has been stationed outside OnLive headquarters today, reporting that employees have been seen moving out of the company's offices.
In the last 20mins have seen three people walk out of— Martyn Williams (@martyn_williams) August 17, 2012
#OnLive with leaving boxes. Still unclear what's happening inside twitter.com/martyn_william…
A report on TechCrunch says that OnLive's supposed buyer acquired the company for its intellectual property, branding, and patents. The firings were also reportedly a move designed to "reduce the company's liability."
GamePolitics offers an ex-employee's rundown of the all-hands meeting lead by OnLive founder and CEO Steve Perlman who reportedly told employees that the company was entering a "variation of bankruptcy which is valid in California" and that "the company as of this moment does not exist," "portions of it are being acquired by a brand new entity" and "all of your options are gone."
That same anonymous ex-employee tells GamePolitics "money was getting tight."
"There were signs of it because budgets had been slashed and there were very long holds on getting business terms signed off on... but the expectation was 'oh Steve's going to go and get another round of funding.' There were a few people hoping for the acquisition because that's really the end game, but if you were reasonably smart you knew that the likelihood of that was pretty low."
OnLive reps have not yet provided official clarification on the matter of rumored layoffs, only telling Polygon "the OnLive service is not shutting down."
Update: According to our own Sean Hollister, who is at the OnLive offices now, a steady stream of employees is emerging from the building, many carrying single white sheets of paper. We haven't been able to talk to any of them, but Martyn Williams says that OnLive has promised a statement soon.
Update 2: Sean Hollister has been told by a company spokesperson to come inside the OnLive building to wait for a statement. Meanwhile, employees have ceased exiting through the main entrance, and our now being instructed to venture out through the garage instead.