OnLive, one of the most prominent services and proponents for cloud-based video game streaming, has laid off its entire staff, Gamasutra can confirm.
Though official statements from the company indicate that the service will remain operable in some form, an affected employee tells us that the entirety of the staff was laid off this morning.
"We can't comment on rumors, but OnLive is just fine," a company representative told us by email. That same representative has not replied to a request for clarification as to what "just fine" entails.
According to a purported internal note shared by industry veteran Brian Fargo, affected employees may be given opportunities at a new company being formed, assumedly to continue operating the OnLive service.
[Update:VentureBeat reports that, according to an official statement, OnLive's assets have been sold to an unknown, newly-formed company, which will continue to operate its services, support its products, and manage its partnerships. It reportedly plans to re-hire a "large percentage" of former OnLive employees.
Meanwhile, an unnamed source claimed to TechCrunch that OnLive CEO Steve Perlman decided to lay off the staff prior to this purchase, as it would reduce the company's liability and practically eliminate the need for employee stock options.]
These mass layoffs are sudden, as OnLive's managment has given no recent indications that it was facing any financial difficulties. The company even announced a partnership with Android-based home console maker Ouya just three weeks ago.
This news follows just a month after Sony announced that it acquired OnLive's biggest rival in the cloud gaming space, Gaikai, for some $380 million, perhaps the largest validation yet that there is value in cloud gaming.
Gamasutra has reached out to CEO Steve Perlman for clarification, but has not heard back as of press time.