It Turns Out That OnLive Tech Was Sold For A Song

The stunning collapse and rebirth of OnLive is one of 2012′s weirder moments – briefly, the company laid off their entire staff, dissolved the company, and sold the IP to a venture capital firm which promptly created a new company, also called Onlive, with no legal continuity to the previous firm. Crazy, and kind of awful it seemed, because the move invalidated the shares held by investors, preventing them from sharing any of the proceeds from the sale of company IP.

However, as more information creeps out, it’s looking more and more as though it was desperation, and not dickishness, that prompted the move. The BBC is reporting that the sale of OnLive IP was a bargain basement deal that ought to leave your jaw on the floor. Lauder Partners purchased the cloud gaming service’s technology for a paltry $4.8m.

This deal came less than 3 months after Sony purchased rival company Gaikai for $380 million. At that time, it was widely assumed a similar deal from a Sony competitor would happen for Onlive. Instead, well, this happened. How things got so bad for the company remain the stuff of rumor, but in the wake of the collapse, anonymous sources from within OnLive have grumbled that the CEO’s repeated refusal to sell the company when it was riding high was partly to blame for the hard times it eventually fell upon. If true, it would explain why the CEO was removed from his position shortly after the sale.

There’s another problem with the new version of OnLive besides how poorly managed the company appears to have been. Sony now has proprietary cloud service of their own, giving them a built-in captive audience unlikely to spend money on both a Playstation 4 and a separate cloud gaming device. That’s a huge advantage going into the next generation. Unless the new OnLive owners can find someone else to take the company off their hands, the company is probably dead. Best case scenario, the new owners sell the technology to a third party for a slightly bigger amount, making a tidy profit for themselves, and diddly for everyone who sunk several years of their lives actually building out the technology.

I have to be honest: If I’d been among those who invested my money in OnLive, I would be feeling like major chump.

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