(UPDATED) OnLive Undergoing Layoffs; Sold to New Company

Update #2:

It's official. The tangled web of rumors has been now been straightened out and all has been made known - OnLive's assets have been acquired by a new company, which is backed by "substantial funding" and will continue to operate the OnLive Game and Desktop services.

OnLive has released an official statement on the matter as seen below:

"We can now confirm that the assets of OnLive, Inc. have been acquired into a newly-formed company and is backed by substantial funding, and which will continue to operate the OnLive Game and Desktop services, as well as support all of OnLive's apps and devices, as well as game, productivity and enterprise partnerships. 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."

Update #1:

According to Kotaku, they've heard from a source inside the company that says a meeting was held this morning where CEO Steve Perlman announced the company would be filing for ABC bankruptcy (a type of bankruptcy that would afford certain protection from creditors).

The source also said that Perlman said the company would cease to exist as it is now and that everyone was essentially laid off, but that a certain number of employees would be brought on to create a new company in the wake of OnLive's ashes.

This info still remains a rumor for now until a legitimate name and source comes forward to confirm the details.


Original Story:

In a strange twist of words this morning, it was first announced through Inxile Entertainment's Brian Fargo on Twitter that he had received an email from an OnLive employee stating that the company had let go of its employees and is shutting down today.

Fargo later tweeted that the employee had recalled the email, so it's unclear whether it was a hoax, a misunderstanding, or a cover-up of sorts.

Ripten reached out for comment to OnLive and received the following comment, negating the rumor that it was shutting down:

"Thanks for the note. We don’t respond to rumors, but of course not.

The exciting news is that the first VIZIO Co-Stars (Google TV stream players) with the OnLive app built-in have just arrived in customer homes, and our second of three ‘Indie Giveaway Weekends’ is going on now. OnLive users can get a free copy of the award-winning games Space Pirates and Zombies and SpaceChem (more details on our blog here: blog.onlive.com)."

For now it would seem that OnLive, according to its top brass, will still function as an entity.

However, GameFront claims to have reliable anonymous sources within OnLive that have confirmed the legitimacy of the email sent to Brian Fargo, and that employees are being let go from the company. The source also claims the entire company (minus key upper management) has been let go, causing suspicion as to OnLive's official response.

For right now, there is no official confirmation from the company on the layoffs, so not only must this remain a rumor, but you should take this with a grain of salt as well. The entire internet has been going back and forth on the story, so we'll see what comes of it by the end of the day.

Stay here for updates on the story as it progresses.