OnLive Sold To OnLive And Nothing Will Change

http://techcrunch.com/2012/08/19/onlive-sold-to-onlive-and-nothing-will-change-heartbreaking-transition-notwithstanding/

by jamesjyu • 14 years ago

47 30 14 years ago

techcrunch.com

batgaijin• 14 years ago

Huh, I wonder how many startups are going to start pulling this to stay 'competitive'. Can't just let the plebes think they can get shares without being a founder or investor.

pbiggar• 14 years ago

It looks like both the founders and investors were wiped out.

CaveTech• 14 years ago

They're going to give stock options to former employees in exchange for consulting work? Stock options similar to the ones the just forcefully discarded from said employees?

I'd be camping out to take them up on that offer!

posabsolute• 14 years ago

if that is true, that's just a mess. They would not have any product without them.

I really wonder how you can face your fired employes and tell them that all their stocks are gone but that they can do some consulting do get those back.

MediaSquirrel• 14 years ago

Options in the old company would have been worth even less given the preference overhang from existing investors! The new company is actually good news for employees as a clean cap table and a reasonable (lower) valuation gives employees a realistic chance that their options will ever be "in the money."

The old OnLive was poison.

Mythbusters• 14 years ago

A transaction like this is sure to raise the confidence of any enterprise thinking of using the onlive desktop product. :)

droithomme• 14 years ago

> All of OnLive, Inc.’s assets (e.g. technology, patents, trademarks, etc.) were transferred to an assignee, which then sold the assets to the new company. There was no transfer to any other party.

What is the name of this assignee? They seem very motivated to not state that piece of information, or how much he was paid by the OnLive Mk II company for these assets.

Stratoscope• 14 years ago

From the press release quoted in the article:

"An affiliate of Lauder Partners was the first investor in the newly-structured company..."

http://www.lauderpartners.com/

Edit: Ah, I just realized that isn't exactly the answer to your question, but may be relevant at least...

mikeryan• 14 years ago

Actually it is Lauder Partners also invests in a Comapny called "Active Video Networks."[1]

Active Video Networks has for years been trying to do the same thing on Cable Set Top Boxes what Onlive has been doing with Games to PCs. Which is basically move all the processing to the cloud with low end thin clients in the home. In the TV Case they'd push interactive apps (via an MPEG frame over your cable infrastructure) to your cable box and basically you could get a whole interactive TV system on crappy old cable boxes.

Looks like Gary Lauder (who's the main guy at Lauder Partners) is doubling down on this strategy.

[1] http://www.activevideo.com/

duskwuff2• 14 years ago

One of the commenters on http://www.joystiq.com/2012/08/18/documenting-the-death-of-o... claims to be an employee, and names Microsoft as the assignee:

> We start cutting corners and being a bit more conservative, and then finally Sony comes to our rescue. But when they look into how our business is being run, they see it's a mess, and pass. We're basically left screwed, but then Steve approaches Microsoft and begs them to take us. They see we're on the verge of bankruptcy and tell him they only want the top-earners and "brains" behind the operation (the 1%) and that they'll pass if he doesn't "trim the fat." So that's exactly what he does.

adrr• 14 years ago

If it was a pure asset transfer and not ownership. Did the investors and other share holders get burned?

AznHisoka• 14 years ago

Sooner or later, you gotta make money. Hype doesn't pay the bills (and all I heard about is hype about OnLive). There's no free lunch.

casca• 14 years ago

There's rightfully a fair amount of noise being made about this as many on HN can imagine themselves in a similar situation. But there may be another lesson to take here.

For me, the key phrase in this article is the first one: "Faced with a dire financial situation...". The nature of working for a startup where you trade current income for potentially huge future income implies a level of risk. Looking at the breathless press coverage, it's easy to imagine that most startups are a raging success. The truth is that most will be in a "dire financial situation" and have no choice but to perform some juggling if there's any chance that they'll stay in business.

It's quite possible that the owners were deliberately trying to screw the employees, but more likely is that it's a desperate move by desperate management who are trying to salvage their dream.

phillmv2• 14 years ago

Why was it in a dire financial situation if it had millions of subscribers?

I can't find any descriptions of the cause of the crap finances, especially with millions of subscribers. A likely scenario seems possible: their financiers/vcs decided they didn't like the direction the company was taking/unhappy with growth and called in their loans and forced everyone out.

Everyone, except the vcs, takes a haircut.

(Was there a more straightforward reason?)

wmf2• 14 years ago

There was a rumor about 8,000 servers with only 1,600 simultaneous users; in other words an out-of-control burn rate.

duskwuff2• 14 years ago

Millions of paid subscribers or millions of (mostly free) accounts? I suspect the latter is closer to the truth.

w0utert• 14 years ago

> Why was it in a dire financial situation if it had millions of subscribers?

I've said it from the very first beginning (and got flamed for it), but IMO the business case for cloud gaming is simply very weak. If there is one at all. It requires highly specialized data centers everywhere around the world to work, and to cover the expenses you need to charge people as much or more as they would have to simply buy the hardware and games directly, and have a better game experience.

Hardware is getting cheaper and more powerful all the time, so you have to wonder why anyone should be surprised building data centers everywhere in the hope that people will pay to use them to play games, is not a very solid way to make money.

jstanderfer• 14 years ago

HN is focusing far too much on the employee stock options. Once any company gets into a "dire financial situation", the options are already completely worthless.

The worse alternative would have been to not restructure and just shut down the company leaving everyone without stock options, jobs and probably without severance either.

balloot• 14 years ago

How exactly does screwing the employees out of stock options help the company not shut down? Outstanding stock options have zero effect on a company's profitability/burn rate.

In any event, OnLive might as well just shut down anyway. It has completely poisoned its name and nobody worth a damn would go work there after this stunt. And it's far too ambitious a project to have any chance to thrive with B-level engineering talent working on it.

dminor• 14 years ago

> and that rumors of Steve Perlman cashing out of the old company were not true.

Gee techcrunch, I wonder who started those rumors?

guscost• 14 years ago

It's more of a restructuring?

GlennS• 14 years ago

If the company is effectively bankrupt, then your equity is worth nothing. That's the risk you take when you accept shares in a company as payment.

OnLive Sold To OnLive And Nothing Will Change

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