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Cloud gaming company OnLive shutting down -- report

The company prepares to file for bankruptcy and dissolve the company, possibly in order to form a new company in place of the old, Kotaku reports.

Donna Tam Staff Writer / News
Donna Tam covers Amazon and other fun stuff for CNET News. She is a San Francisco native who enjoys feasting, merrymaking, checking her Gmail and reading her Kindle.
Donna Tam
OnLive Desktop
Screenshot by Ed Rhee/CNET
Update: Late Friday, OnLive confirmed the sale of its assets to an unnamed suitor, who will continue to offer its cloud gaming service. Read the story, "So OnLive isn't dead -- it just sold all its assets to a new owner," here.

Cloud gaming company OnLive appears to be in turmoil, having possibly fired all of its employees and prepping for a bankruptcy filing, according to rumors reported by Kotaku.

The gaming blog cited a tweet from InXile Entertainment CEO Brian Fargo, who reported getting an email from a just-fired employee who relayed the company was dead.

"Just received an email that OnLive is closed as of today!" Fargo tweeted.

The email, reportedly sent to developers, was a farewell message that said all of OnLive's employees are losing their jobs and that a new company would be formed in OnLive's place. The new company's management would be in contact with game developers about which titles would continue to be available on OnLive.

An OnLive spokesperson declined to comment on the matter, telling CNET, "We don't respond to rumors."

Despite OnLive's silence, the news has been spreading.

Martyn Williams, senior correspondent at IDG News Service, started tweeting from outside the OnLive offices about seeing employees leave with moving boxes:

"In the last 20mins have seen three people walk out of #OnLive with leaving boxes. Still unclear what's happening insid," he tweeted.

OnLivelaunched in 2010, promising console-like speeds over broadband and was marketed as a potential console killer.