OnLive: So what’s going to happen now?

It’s been a turbulent week for the folks over at OnLive.  The cloud streaming service was set to really move gaming into the next level for 2012/2013, and had just released THQ’s Darksiders II this week, with Square Enix’s Sleeping Dogs set to follow next week.  But then, on Friday morning, right before the weekend, the company dropped a bombshell on its employees.

At first, it was reported that massive layoffs were taking place, and it was (wrongfully) indicated that the service would eventually shut down.  However, as the day went on, the truth eventually unfolded – OnLive wasn’t shutting down, it was merely sold, and looking for “restructuring”.  It was further reported that the employees who were laid off were given a severance package, and that some of them would be hired back on at a later date, following the completion of the rebuilding of the company.

OnLive may not have been as profitable as other streaming services, but we thought they were doing pretty good for a while there, drawing in major partners like 2K Games, THQ and even Electronic Arts (who were readying Bulletstorm for the service – and probably still are).  Now, with this purchase, their future is definitely in question.  However, we have a few ideas.

First, there’s the rumor that they were picked up by a smaller subsidiary, one who would restructure the company so that it’s better suited for managing cloud gaming services, and possibly with a better advertising budget.  While this is a likely scenario, it’s probably the least exciting of the three that we’ve heard.  Having a newcomer enter the picture with a lot of cash doesn’t entirely guarantee success, as a business venture isn’t always guaranteed to go over well.  Just ask anyone who’s acquired a big-name developer, only to scuttle them a few years on when their big franchise doesn’t do well.  (Look at Radical Entertainment and Bizarre Creations, despite their loaded game libraries.)

Still, the idea of someone new, with fresh tactics and thoughts on how to put the best foot forward for the company, and bring back some of the folks that made it work so well since its launch a couple of years back, is still a moderately exciting one, especially if they’ve got some initiatives that will really propel more MicroConsoles into homes or, better yet, services that won’t require the little box, like the proposed mobile service and more implementation in TV’s.

Now, the second scenario involves OUYA.  Before their restructuring this past week, it was confirmed that OnLive had signed up with the newcomer console, and that it would include its services when it launched in 2013.  Now, OUYA recently came across a huge amount of cash through their KickStarter, since it was mega successful and reached its goal ten times over.  What if OUYA picked up OnLive and is working to restructure them to be a fully integral part of their service?  OnLive does have a great menu system, after all, as well as the Arena service, where you can see what people are playing at any time online.  That’s a neat feature in itself – and something OUYA could definitely use.

Now, it’s a long shot, and the OnLive service could be worth millions more than what OUYA made.  But what if?  It’d be interesting to see the service re-emerge with the OUYA business strategy, and the MicroConsole done away with (or revitalized) with their services.  Just a guess, though.

Finally, there’s the idea that Microsoft could’ve gone in and swooped up OnLive.  It’s no secret that the mega-millions company was looking for a cloud gaming service partner, especially after Sony snagged Gaikai a few months back prior to E3.  Rumors began swirling that Microsoft was looking at a purchase, and it’s looking very likely that it happened, and this “restructuring” may be the next level of the company’s proposed Xbox Live service.  We’ve seen some of the stats behind the Xbox 720, so this is very, very possible…and quite exciting.

Now, what that means for current OnLive subscribers is a mystery.  Will they have to upgrade to Xbox Live?  Will they get to keep their current services and get a deal on an Xbox 720?  Who knows?  No one’s talking about the buyer just yet, and we may not even hear anything until, at the very least, the Tokyo Game Show.  Hell, Microsoft may not even say anything until E3.

For now, though, OnLive will continue to run the way it is, and new games will continue to be added, making the service something of value for those who bought in to it, and those who will subscribe down the road.  But its future is definitely more promising than bleak, provided the right business partner is stepping up to make them so.  Really crossing our fingers on Microsoft here…