The cloud based video gaming service OnLive has been sold to the vulture capitalist outfit Lauder Partners for just $4.8 million in one of the more embarrassing industry failures of the year.
The sale involved many of the company’s workers losing their jobs, and investors writing off their stakes. It took place in August but appears to have been kept secret.
But it seems that efforts to get a better price for the company backfired.
Joel Weinberg, president of Insolvency Services Group (ISG) which handled the sale said that if the sale had not taken place, the company would have not had enough cash to fund the significant costs to preserve and market OnLive’s patents and other intellectual property.
OnLive allows users to play “premium” games over the internet, without the need for a console. The technology had been seen as replacing dedicated games machines.
But it did not get enough users. OnLive has said it had 1.5 million “active users” at the time of the sale. However other reports suggest that only about 1,600 subscribers were using the service at any one time. OnLive company owed about $18.8 million.
It seems that Lauder Partners wanted OnLive’s patents which were worth hundreds of millions of dollars.
Workers lost their rights to stock in the company and investors who had spent tens of millions of dollars buying a stake in the business were told they would only be compensated if money was left over after paying the debts.