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OnLive was sold for just $4.8 million
OnLive was sold for just $4.8 million
October 10, 2012 | By Mike Rose

October 10, 2012 | By Mike Rose
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Troubled cloud gaming company OnLive was sold for just $4.8 million earlier this year as it went through the insolvency process, a report from San Jose Mercury News states.

OnLive sold all of its assets to an unnamed company in August, letting go of all of its staff in the process, although the exact details of the deal were not divulged.

Now a new report states that venture capitalist Gary Lauder paid $4.8 million for OnLive just before the liquidation of the company was set to happen.

Joel Weinberg, CEO of Insolvency Services Group, the company named as the assignee in the insolvency, noted that the amount was the best that OnLive could have hoped for. Weinberg's lawyer confirmed with Mercury News the authenticity of the detailed letter.

Notably, the letter also states that OnLive had at least $18.7 million in outstanding debts before the sale, meaning that the company's creditors will now receive no more than around 26 cents for each dollar that they were owed.

In comparison, Sony paid approximately $380 million for rival cloud gaming company Gaikai earlier this year, with the aim to deliver cloud gaming and other streaming content on "a variety of internet-connected devices."


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Comments


Alex Nichiporchik
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There goes the whole cloud gaming hype.

Chris Lynn
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I am very curious to see what the future holds for cloud gaming. The tech was somewhat impressive, and as far as I saw it worked well. Not sure what happened to see it at such state.

But I think cloud gaming will come back., specially considering Gaikai's situation. I can see it being used to let mobile or low end notebooks run current/next-gen in a few years.

E Zachary Knight
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Before cloud gaming can become truly successful, 3 things need to be addressed which have little to nothing to do with the cloud gaming services:

1) Broadband penetration. Specifically in the US, not enough people have access to high speed broadband to create a large enough pool of potential customers.

2) Limited Bandwidth. With slow speeds many people just can't use the service. Combined with the fact that when this is running, you really can't do much else on the internet as this hogs it all.

3) Download caps. While not all services cap downloads, many do and many of them have really low caps. If a cap is in place, then this service is useless to the consumer.

The only other real issue that cloud gaming needs to address is the issue of need. OnLive and other services just have not convinced the gaming consumer that they need the service. Decent computers are really cheap now and they are easily hooked up to televisions. Do we need something like this? For the vast majority of people, the answer is no.

Michael Rooney
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@Zach: I don't think it's a throughput issue so much as a latency issue. My problem with OnLive was always the input latency, not my connection speed. This was pretty constant regardless of how much other stuff I was doing on my computer (downloading stuff, streaming video, etc.).

Also, OnLive runs on cheap decent computers you can hook up to your TV. That's one of the selling points of OnLive; it should run on pretty much anything you can hook up to your tv and the internet (possibly just your tv if your tv can hook up to the internet). The separate box they sold was just for people who didn't want to buy a computer to run it on.

Wyatt Epp
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@Zach
Couple more, if we're to talk about sustainable scalability:
4) Inefficient service delivery. Per-bit quality was pretty impressive, but considering the iron needed to back it, the costs in hardware alone are punishing. The inability to virtualise a node is a real killer, especially when you're dealing with a system that doesn't cope well with multiple simultaneous users in the best of circumstances.

5) Infrastructure Quality. I find this is the real elephant in the room that confounds me. Unless they had hardware set up datacentre local to every place someone wanted to play games, I still don't see how they could have managed to have enough bandwidth to serve even a medium-sized city. (I guess we won't find out for a while now.) No location has limitless bandwidth.

People invoke the tired, "but Netflix does it!", frequently but it's not really the same problem. Netflix doesn't have to care much about latency provided throughput is consistent; their primary need is just for a lot of bandwidth on reliable servers. You can stream video from pretty much anything without much hassle and you can serve multiple streams per node without saturating your link. So Netflix can get away with a demand-scaled swarm of virtualised Linux nodes serving pre-compressed mpeg4 from AWS just fine.

This is a (really) tough thing to estimate, but I figure OnLive were about....ooooh, five years early for the sort of infra they really need (2 years because computing is like that).

Ian Uniacke
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Wyatt you're absolutely correct, although I'd pitch it about 20 years off being viable (although admittedly I'm talking mass market). People think it's like television but it's not. Even more so if you wanted the whole family to play you would need at least 4 times the band width. With television you are sending the same signal to every viewer so the whole family can watch. Then you would need massive computer centers to make it viable at a mass market level. Building this kind of infrastructure and solving the overhead problems that go along with it is going to take a long time.

Also people forget that cloud computing was actually the way computing worked in the 70s, we just called them thin clients back then. So this is not really something new and the problems are not new either, people should have been able to see this coming.

Bob Charone
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poor Sony overpaid by $375 million for Gaikai it seems!

Nooh Ha
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Remember, OnLive had a load of patents which will have been included in the assets. Gaikai had just one.

So, they overpaid by $379m IMO...

Alan Rimkeit
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Yeah, someone over at Sony really screwed up there. Of course David Perry, Rui Pereira, and Andrew Gault are all LOVING IT. ROFL.

Jeremy Alessi
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I still think this concept has merit but in many ways it was based on the limitations of graphics hardware. These days it's just not an issue anymore. Graphics are no longer the driving factor of the industry.

Rodolfo Rosini
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Just to clarify some of the comments:

- the patents are not part of the sale as they were Perlman's own, they were just licensed to OL

- in order for cloud gaming ever to cater beyond the demo/presale stage (where Gaikai shined hence why it was acquired) the tech needs to support virtualization (i.e. more than one concurrent player per box). until then the economies of scale do not make sense no matter how hard OnLive PR rep inhale from that bong trying to tell you otherwise

Skylar Kreisher
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It's interesting to look back at all the buzz around OL and how the investors seemed to think it would revolutionize the industry and make traditional digital distribution models obsolete. Fund managers who don't understand game consumer's behavior shouldn't be investing in untested game markets. Unless DARPA reinvents the internet, server-side game processing and content generation will always result in some meaningful latency. They didn't need to spend hundreds of millions of dollars to find out that consumers wouldn't be interested in an inferior experience. Anyone who's ever tried playing a modern game on a HDTV with 120Hz+ buffering turned on knows that realtime games are nearly unplayable when there's even the slightest delay.


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