Rumors have been swirling all day (that being August 17th, 2012 for the historical record) about the future of OnLive, the first major foray into the concept of streaming modern video games. While no one can seem to quite agree on why, everyone seems sure that a vast number of employees got let go in the process.  As this is still something shrouded in rumor, it would probably be best to cut purely to the known aspects.

The news seems to have broken when Brian Fargo (of Wasteland 2 and InXile Entertainment fame) tweeted that

"Their employees are sending out emails that #OnLive will be closed by the end of the day."

Naturally, this seems to have been followed by a rash of inquiries about the company's current status from every news outlet under the sun. OnLive's Director of Corporate Communications Brian Jacquet deflected the questions, responding to Joystiq with:

"We don't respond to rumors, but of course not."

This was of course not enough to actually turn away any real suspicions, especially when an eyewitness tweeted that employees were trickling out of the OnLive offices in Palo Alto, California.

While the initial report was that OnLive had simply gone bankrupt (an idea that would not surprise many of us who are unsure of the long-term prospects of this content delivery method), the most recent reports seem to imply that OnLive has been bought out by an as yet unnamed company. With this change in management seems to have come a complete bloodletting, with the company rumored to have shed as much as half its employees under its new ownership. If this is the case, it is deeply saddening to see many people losing their jobs, but it will be interesting to see how this story develops, if OnLive has been purchased, it will be joining the other game streaming upstart Gaikai which was purchased by Sony not too long ago.

Update: A new statement has been released by Onlive's Director of Corporate Communications(i.e. Head PR Rep) saying,

“We can now confirm that the assets of OnLive, Inc. have been acquired into a newly-formed company and is backed by substantial funding, and which will continue to operate the OnLive Game and Desktop services, as well as support all of OnLive’s apps and devices, as well as game, productivity and enterprise partnerships.�

“The new company is hiring a large percentage of OnLive, Inc.’s staff across all departments and plans to continue to hire substantially more people, including additional OnLive employees. All previously announced products and services, including those in the works, will continue and there is no expected interruption of any OnLive services. We apologize that we were unable to comment on this transaction until  it completed, and were limited to reporting on news related to OnLive’s businesses. Now that the transaction is complete, we are able to make this statement.â€�

So, it appears that they are out of the fire, but only time will tell if they are still in the cook pot.

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