Posted on August 23, 2012 AT 05:38pm
Although rumors of OnLive’s video game streaming service coming to an end were premature, it seems there was some truth to the company’s dire straights. Aside from leadership problems, OnLive racked up over $30 in debt.
Interestingly, that changes the dynamic of the news cycle that’s followed OnLive throughout the last week.
San Jose Mercury News discovered the debt in an interview with Joel Weinberg of the Insolvency Services Group:
“[OnLive] was a company that was in dire straits. It only had days to live in terms of cash flow and the like,” said Weinberg, whose firm’s role in the OnLive insolvency process is similar to that of a bankruptcy trustee. “Something had to be done immediately or there would have been a hard shutdown, which would have been a disaster.”
To hear OnLive’s PR department and social media arms spin the story, the sale of the company was a carefully calculated deal that was smoothly happening behind closed doors.
In reality, things were down to the wire on finances, with the reality of OnLive cutting their services at a moment’s notice. Had that happened, the financial fallout would have been far worse, affecting many customers.
Steve Pearlman will continue on as CEO at OnLive, so hopefully this situation won’t repeat itself.
All things considered, the buyout is probably the best-case situation that could’ve happened, even with the unfortunate circumstances that led to over 50 percent of OnLive’s staff being let go. As it stands, the company gets a do-over, and possibly has the backing it needs to become a bigger entity than before.
Source: San Jose Mercury News
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